After a turbulent public courtship of less than two months, Anheuser-Busch (NYSE:BUD) succumbed to the advances of Belgian brewer Inbev, which came calling with an offer of $52 billion for the leading American brewer's equity. It proved too sweet for the company's board to refuse.
I thought that A-B and its advisors were stretching to refuse the first offer of $65 a share. They had no defensible answer to an offer of $70 per share, which certainly brought them to the negotiating table quickly. The A-B board has performed quite well for shareholders overall, by not giving in to the first offer, while also not allowing a bid to go hostile and get mired in endless legal battles. They have spared A-B shareholders the sudden decline in stock price that Yahoo! (NASDAQ:YHOO) shareholders have seen since Microsoft (NASDAQ:MSFT) walked away from the negotiating table.
Inbev has always been clear about its intentions and its ability to complete large and complex international transactions, and has not shied away from risk. In contrast, Anheuser-Busch was never able to truly see itself as a company competing on a global stage, focusing instead on its domestic operations while making selective and relatively small international investments compared to Inbev and SABMiller (OTC: SBMRY).
While other iconic American food and beverage companies like Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP) were loath to let any international competitor gain scale or competitive advantage, Anheuser-Busch was content to sit on the sidelines as the world consolidated around it. With few takeover defenses in place and no controlling stockholder, I think it was simply a matter of "when" the company was going to be acquired.
A lot of commentary has focused on the weakened dollar leading to an opportunistic bid. While this may have hastened the process, I think it played a relatively small part in the grand scheme. Consolidation of international brewers is a much more powerful force than currency fluctuation. This deal is not Fed chief Ben Bernanke's fault, if "fault" is in fact something that needs to be assigned at all when stockholders will realize a payout in excess of $50 billion.
The takeover leaves a gaping hole in the American beer scene. Anheuser-Busch has always tried to make its name the third corner of a triangle shared by mom and apple pie, and that is going to be very difficult to do now that the company is foreign-owned. The company almost seems to be hiding it, as its press release states "Inbev and Anheuser-Busch Agree to Combine," which suggests a merger rather than the reality of an outright sale of Anheuser-Busch.
But this is not going to fool anybody, nor will the new name of Anheuser-Busch Inbev. I would not be in the least surprised if a now relatively small brewer takes the American flag that Anheuser-Busch currently wraps itself in, and wins over a number of formerly loyal Bud drinkers. This seems especially likely given that the other significant beer oligopoly participant, MillerCoors, is largely foreign-owned and controlled. One way or another, the American beer industry has been changed forever.
