In 2008 while most of us were thinking about the collapse of the economy - former Financial Times correspondent Julie MacIntosh was thinking about beer - to be more specific, she was thinking about the king of all beers.
It was the summer of that year when InBev — a giant foreign beverage corporation located in Belgium but controlled by Brazilians — made an audacious offer to acquire the iconic Americans company, Anheuser-Busch.
In her new book, "Dethroning the King: The Hostile Takeover of Anheuser-Busch, an American Icon" the award-winning journalist tells the story of how this famed company —the jewel of the Busch family for more than 150 years — fell victim to a hostile takeover.
It is quite astounding when you think about it, I mean how could a company that controlled a staggering 50% of the US beer market, with its solid global reputation as "America's beer" fall so suddenly and so easily into foreign hands?
As MacIntosh explains it was a combination of timing, and some unexpected help from members of the Busch dynasty, the very family that had run the company for more than a century.
MacIntosh has written a Guest Author Blog for Bullishin which she explains what drew her to this story was, "Part of the allure of turning the takeover of Anheuser-Busch into a book was the wealth of tales I had heard about the tumultuous relationship between August Busch III and his eventual heir, August Busch IV. The two former CEOs and their board of directors vividly demonstrated how messy and ill-advised it can be in this modern business age to let nepotism dictate how the torch is passed at a publicly-traded company. The stories I unearthed – fights between father and son over private jets, shareholder presentations and the company dining suite – surpassed my expectations in terms of shock value."
To find out more about the "Dethroning the King: The Hostile Takeover of Anheuser-Busch, an American Icon" and to read MacIntosh's full post click ahead.
Guest Author Blog by: Julie MacIntosh author of the new book "Dethroning the King: The Hostile Takeover of Anheuser-Busch, an American Icon"
InBev made its unsolicited bid to buy Anheuser-Busch in 2008, I had a handful of years under my belt as a mergers and acquisitions correspondent and had covered hundreds of corporate mergers. I had seen no shortage of contentious deals that involved powerful, controversial characters. But when Anheuser-Busch capitulated just weeks after InBev’s initial $46 billion entreaty, and details started seeping out about what happened behind the scenes, I quickly grew convinced that the foreign seizure of Budweiser warranted a fly-on-the-wall investigative account.
Part of the allure of turning the takeover of Anheuser-Busch into a book was the wealth of tales I had heard about the tumultuous relationship between August Busch III and his eventual heir, August Busch IV. The two former CEOs and their board of directors vividly demonstrated how messy and ill-advised it can be in this modern business age to let nepotism dictate how the torch is passed at a publicly-traded company. The stories I unearthed – fights between father and son over private jets, shareholder presentations and the company dining suite – surpassed my expectations in terms of shock value.
But I was also intrigued by the broader macroeconomic thread that runs through this story: the loss of a great American icon like Budweiser, and what it signals about the direction in which the American economy is headed.
Americans might have pioneered the aggressive, returns-driven form of capitalism that we now see entrenching itself in other parts of the world, but we don’t command the exclusive rights to implement it. We’ve done well in exporting our brand of business through our top-tier MBA programs and the business media, and now it has, not surprisingly, boomeranged right back at us. While we navel-gaze and argue in circles over taxes and political reform, we’re seeing takeovers of valuable, iconic American assets by driven, U.S.-educated foreign entrepreneurs who are one-upping Americans at our own game. The same trio of wealthy Brazilians who helped mastermind the takeover of Anheuser-Busch, for example, just funded the acquisition of Burger King, another well-known American brand that had let itself lag.
At the start of his career at Anheuser-Busch in the late 1970s, August Busch III was a staunch advocate of forward-thinking business management. He hadn’t even graduated from college, but he saw the value of turning Anheuser-Busch, which his dad ran like a corner store, into a modern corporation. With leagues of MBAs slaving away beneath him, August III built Anheuser-Busch into a commanding presence that captured an astonishing 52 percent of the U.S. beer market.
His problem was that he didn’t see a need to go global. His foreign rivals in the beer industry bought up assets left and right, and the Brazilians who were behind the creation of InBev plied him with entreaties about becoming the “Coca-Cola of beer.” But he fastened his blinders ever more tightly and focused on maintaining Anheuser-Busch’s supremacy in America.
August III was proud to run a company that created a beloved product from scratch and “ran things” well. He famously loathed Wall Streeters and others who spent their time shifting money and assets from one place to another, rather than creating or building something tangible. And years after his retirement as CEO and chairman, there’s certainly an argument to be made that America has funneled too much brainpower in the past decade toward slicing, dicing, packaging and repackaging the same basket of goods rather than producing better, faster, stronger products.
Even iron-fisted August III, however, lost his way once the U.S. beer market grew saturated and, eventually, stale. He started relying on finding new ways to convince American drinkers to buy the same beer, rather than slashing costs and searching for an acquisition that could help spur growth. In 2008, InBev ultimately convinced shareholders that it, rather than the still-green CEO August IV and his team, was the better candidate to lead Budweiser into the next stage. Anheuser-Busch left itself no argument for staying independent. It spent frivolously for far too long, and it would have been ludicrous to argue that the takeover of the company by a foreign brewer somehow infringed upon America’s national interests.
Some of America’s most valuable assets today are its best-known brands, and companies that rest on their laurels aren’t merely vulnerable to attack by their neighbors. Dozens of aggressive foreign companies are looking for a bite at the American market, and the best way to make a lower-risk entrance is to snap up an American brand with built-in loyalty. The weak U.S. dollar, which has essentially put American companies on sale at a discount, only catalyzes that demand.
This is healthy, to an extent. There’s nothing wrong with a slow seepage in control of certain older, more mature corporate assets to overseas buyers, as long as there are plenty of little corporate seedlings rising up to supplant their predecessors and become the next loyalty-engendering institutions. Those Americans who bemoan the loss of their Whoppers and Bud Light can take solace in the astronomical success of newer American brands, with Facebook as perhaps the most notable example, and in how quickly those brands can rise to the top.
To read an excerpt from"Dethroning the King: The Hostile Takeover of Anheuser-Busch, an American Icon"click here.
Email me at bullishonbooks@cnbc.com — And follow me on Twitter @BullishonBooks
