InBev / BUD: The Brazilians Are Coming

There's an air of inevitability about this InBev bid for Anheuser Busch (BUD): It might take a while, it might end up having to be raised, but I have a feeling that, sooner or later, it's going to happen. When it does, the world will finally have a truly global brewing company - and that company will be run by Brazilians.

InBev, of course, is the result of a merger between Brazil's Ambev and Belgium's Interbrew. But although the Belgian company was larger, it was the Brazilians who took the reins, with InBev being run by CEO Carlos Brito and CFO Felipe Dutra. These guys think big: Dutra has been negotiating with Jamie Dimon directly about a $40 billion syndicated loan plus a bridge of somewhere between $10 billion and $17 billion.

Banks like JP Morgan and Santander are happy to lend Dutra the money because he's the kind of client they love: global, powerful, and very efficient. The storied Busch family might not like this kind of thing, but then again they might not have much choice:

After delivering better-than-announced savings in the merger of Interbrew and AmBev, the management team at InBev has a reputation for ruthless efficiency in cutting costs. The mooted cost savings in a deal with Anheuser would be in line with other deals in the beer industry - though those close to the company expect that the level of savings announced would be exceeded by InBev's cost zealots.
A large portion of the savings would come through extending zero-based budgeting - a savings system which requires businesses to justify every expense anew each year - to Anheuser's business.

In this sense, the Brazilians are to beer as the Mexicans are to cement: one of the few huge companies that has a proven track record of successfully implementing large acquisitions around the world. As such, they can pretty much raise as much money as they like, whenever they like. Even now.

Comments

[langman:]

I live in StL.....this will add to a long list of companies with history and HQ in StL who have been bought by foreigners.

This will be a blow to this town..........

what I don't get is why have the insiders been selling the stock all week longbefore this big jump today.......I mean insiders selling big chunks 50k and 100k at a shot mostly around 50-52.......wow.

they might be leaving a lot on the table here.

why would they do that?

2008 May 23 06:25 PM

[Finance User:]

The title could be as well 'The Belgians are coming' as Interbrew has a very long experience in buying and integrating other beer companies from all over the world. Merging the two companies is a match made in heaven due to the current market coverage of each company.
Also it will allow Inbev to distribute more easily its speciality Belgian beers in the US.
The BUD culture will not be impacted in the US, this is not Interbrew's style.
For Inbev it is now or never due to the strong Euro, it makes the deal one third cheaper.

2008 May 24 05:13 PM

[KCInvestor:]

only think I can think is that once the official offer is out, or once the stock has severely reacted to the offer, they will be locked out from selling or may have to jump through hoops to make sure they are not breaking any insider trading laws...perhaps they wanted out without any strings attached...i'm sure they have already been in closed door talks before the leak was reflected in the stock price...i heard of this rumor about a year and a half ago and nothing ever came of it

2008 May 27 05:49 PM

[oli:]

Inbev might be run by a Brasilian CEO, it is still a belgian based company with headquarters in leuven belgium.
check link
en.wikipedia.org/wiki/...
merging with Ambev was a step in between to have half a foot into the us market since they have the same distribution channels as coca cola. Now they made the circle complete.
Don't worry, you will have great beer comming your way

2008 Jun 12 07:40 PM