1. Did Anheuser-Busch InBev overpay for Anheuser-Busch? In your analysis, consider:
a. The rights offering.
b. Anheuser-Busch InBev’s current value compared to InBev’s value prior to the acquisition.
c. Potential future cost savings.
d. Potential gains from being able to sell InBev brands through Anheuser- Busch’s distributors.
e. Potential loss of market share in the United States from lower advertising expenditures and possible adverse reactions to other cost cuts.
f. Potential gains from entering the distribution market.
2. Is Anheuser-Busch InBev in danger of being unable to repay its debt? Explain.
3. Is Anheuser-Busch InBev capable of acquiring Grupo Modelo in 2010? Explain.
4. Evaluate InBev’s performance in integrating and transforming Anheuser- Busch.
Jorge Paulo Lemann was born in Brazil in 1939 to Swiss immigrants. Mr. Lemann, a 1961 Harvard College graduate and world- ranked tennis player, was Swiss national tennis champion in 1962 and the Brazilian national champion five times between 1967 and 1976.1 Additionally, in 1971 Mr. Lemann founded Banco de Investimentos Garantia SA. Carlos Sicupira and Marcel Telles joined Garantia, eventually became partners at the firm, and the three of them grew Garantia into Brazil’s most prestigious investment bank.2
In 1989, Mr. Lemann, Mr. Sicupira, and Mr. Telles gained control of Copanhia Cervejaria Brahma, one of Brazil’s two largest brewers, and Mr. Telles became the brewer’s CEO. Mr. Telles, in collaboration with his partners, eliminated company cars, luxurious offices, and the executive dining room. He also introduced incentive performance systems throughout the firm. In 1998, following heavy trading losses from the Asian financial crises, the three partners sold their investment bank to CreditSuisse for $ 675 million.3
The following year, however, Brahma acquired brewer Companhia Antarctica Paulista in Brazil’s largest-ever corporate takeover. The combined firm, renamed AmBev, controlled 70% of the Brazilian beer market.4
In 2004, InterBrew, a Belgium brewery that ranked as the second-largest beer company in the world, acquired AmBev, the fifth-largest brewing company in the world. The combined firm, renamed InBev, and headquartered in Belgium, surpassed Anheuser-Busch to become the world’s largest brewing company. Although Inter-Brew was the acquirer, Mr. Lemann, Mr. Sicupira, and Mr. Telles retained a signifi cant equity interest in InBev. Mr. Carlos Brito, a Brazilian citizen and Stanford MBA, had served as AmBev’s CEO since 2003. He was named InBev’s North American zone president. In 2005, when Mr. Lemann, Mr. Sicupira, and Mr. Telles gained a control-ling interest in InBev, Mr. Brito was named InBev’s president.5