urbanSTL

DOGTOWNB&R wrote:Southsidescott, just curious. Do you want the AB/INBEV deal to go through because you feel it is best for the company or its stockholders? I have been a stockholder for about 5 years. The stock price has been stagnant. I understand that the deal is in our best interest as shareholders, but is it worth a short term payday, to jeopardize AB's future. (not saying the deal will for sure hurt AB)



I wonder if AB could globalize on their own. Their conservative approach internationally has hurt them, but they could change their strategy and florish as an independent company, in my opinion. I just wonder if INBEV's strategy will work, LONG TERM. I'd hate to see them destroy the goodwill, reputation and image AB has built over the years. I bought AB stock for the long term. I just hope the company grows under Brito's leadership.

As a stockholder I want my $70.



The reasons I own BUD are

a) I know/trust/drink/believe in the product.

b) While envious and disgusted by their wealth and arrogance, they have managed to continue what their ancestors began without too many serious stumbles.

c) Civically, they are stars.



I bought for the long term and knew that they have a conservative style that leans towards missed opportunities. But I felt that they get it right more than they get it wrong.



As for InBev? Dunno. I am still learning about them. From what little I have seen I think it will work out fine, but we will see.



-Scott.

by the way, the new Budweiser American Ale is fantastic! Maybe if they were making beers of this quality all along and diversifying their offerings they wouldn't have had stagnant growth over the recent years.

I'm afraid to say I think INBEV will hurt the brand in the long term. AB's marketing was top notch, which is obviously what sold the beer, not necessarily the beer itself.. I'm sure inbev will slash and burn, and long term, I am certain AB will lose market share. So, I don't fully understand how the stock shoots up with inbev, when long tern, they will make the brand weaker.

JCity wrote:I'm afraid to say I think INBEV will hurt the brand in the long term. AB's marketing was top notch, which is obviously what sold the beer, not necessarily the beer itself.. I'm sure inbev will slash and burn, and long term, I am certain AB will lose market share. So, I don't fully understand how the stock shoots up with inbev, when long tern, they will make the brand weaker.

Maybe I don't understand say..the New York market where "Bud" is still a major contender, but it's definitely a cultural thing where I'm from...which, INBEV could hurt as well.

JCity wrote:I'm afraid to say I think INBEV will hurt the brand in the long term. AB's marketing was top notch, which is obviously what sold the beer, not necessarily the beer itself.. I'm sure inbev will slash and burn, and long term, I am certain AB will lose market share. So, I don't fully understand how the stock shoots up with inbev, when long tern, they will make the brand weaker.

That's funny. I've never tasted cold, refreshing marketing before. I have, however, tasted cold, refreshing beer. The bottom line is that the portfolio of InBev beer is of higher quality. It simply tastes better. If anything hurt Budweiser's brand, it was Budweiser.



Budweiser spent way too much on marketing. I'm speaking about the law of diminishing returns. Their marketing budget was not optimal. They could cut this budget by a good amount and only lose a small, marginal share.



Budweiser's been known for being too fat. They will make the corporation leaner...



And everyone's precious Budweiser brand will still be fine. In fact, it will be better.

innov8ion wrote:The bottom line is that the portfolio of InBev beer is of higher quality. It simply tastes better. If anything hurt Budweiser's brand, it was Budweiser.



Budweiser spent way too much on marketing. I'm speaking about the law of diminishing returns. Their marketing budget was not optimal. They could cut this budget by a good amount and only lose a small, marginal share.

How do you know that?



In any case, I think you are contradicting yourself. The competition tastes better + Budweiser is #1 in global sales = They spend too much on marketing???



I would argue that Budweiser is #1, and it is an iconic global brand, despite it's taste, precisely because they spend so much on marketing. That's like saying that McDonald's, Starbuck's, or Coca-Cola " spent way too much on marketing". Sure, you can argue that, but not without addressing the loss of brand equity that will result from a cut in marketing expenditures. And marketing effectiveness is almost impossible to measure accurately - "marketing ROI" does not work - and the slope of Budweiser's marketing expenditure-demand curve could be pretty steep.



InBev has said that they want to translate global awareness of the Bud brand into penetration of all markets and increased global sales, making it a truly global product. How do you anticipate that they will do that while reducing marketing costs? Unless you think InBev will somehow make Budweiser taste better?

jlblues wrote:

innov8ion wrote:The bottom line is that the portfolio of InBev beer is of higher quality. It simply tastes better. If anything hurt Budweiser's brand, it was Budweiser.



Budweiser spent way too much on marketing. I'm speaking about the law of diminishing returns. Their marketing budget was not optimal. They could cut this budget by a good amount and only lose a small, marginal share.

How do you know that? In any case, I think you are contradicting yourself. The competition tastes better + Budweiser is #1 in global sales = They spend too much on marketing???

In markets where the brand is strong and they have high market share, I believe they can make cuts. I'd suggest this is true in the US at least.



It's widely known that best-selling music is not necessarily high quality. Think Brittany Spears. I wouldn't say there's anything wrong with Budweiser's mainstream products. They have mass appeal. But they've really struck out on the growing craft beer niche market. American Ale seems to be a step in the right direction. Kudos to them. Additionally, I've never thought of Michelob as a premium brand. Either they turn it into a great craft beer brand or they consider canning the damn thing.

jlblues wrote:I would argue that Budweiser is #1, and it is an iconic global brand, despite it's taste, precisely because they spend so much on marketing. That's like saying that McDonald's, Starbuck's, or Coca-Cola " spent way too much on marketing". Sure, you can argue that, but not without addressing the loss of brand equity that will result from a cut in marketing expenditures. And marketing effectiveness is almost impossible to measure accurately - "marketing ROI" does not work - and the slope of Budweiser's marketing expenditure-demand curve could be pretty steep.

Bud's marketing was/is great as you say. I'd like to see more research on the topic and depending on the vagaries of each market, I feel strongly they could make modest cuts in the budget while still only losing a marginal share.

jlblues wrote:InBev has said that they want to translate global awareness of the Bud brand into penetration of all markets and increased global sales, making it a truly global product. How do you anticipate that they will do that while reducing marketing costs? Unless you think InBev will somehow make Budweiser taste better?

I doubt they would cut marketing spending in growth markets. The US ain't a growth market. It would be fairly easy to initiate modest cuts in flat markets and reinvest the money in growth market advertising. Pretty straightforward stuff.

OCTOBER 27, 2008

WALL STREET JOURNAL





Anheuser Slides More, But InBev Stays Loyal



Anheuser-Busch Cos. shares fell further Friday and traded nearly 20% below the proposed price of the InBev NV acquisition amid continued jitters about the deal, while InBev said it was committed to the acquisition at the agreed-upon terms.



InBev agreed to acquire Anheuser-Busch for $70 a share in cash in July. On Friday, Anheuser-Busch shares fell 2.1%, or $1.20, to $56.93 in 4 p.m. in composite trading on the New York Stock Exchange. The stock fell as much as 6.5% at the start of the trading session.



"We remain fully on track to close the A-B/InBev combination on the agreed terms by year end," said a spokeswoman for InBev, based in Belgium.



An Anheuser-Busch spokeswoman declined to comment.



The companies have faced complications to the deal. InBev recently said "unprecedented volatility" in capital markets has forced the company to delay raising new equity that was intended to help fund the deal. At that time the company said it still expected to complete the purchase by the end of the year and instead of raising equity, the company would rely on a bridge loan, which expires six months after the deal closes.







READ MORE/ENTIRE ARTICLE:

http://online.wsj.com/article/SB1225067 ... lenews_wsj





another:



Fitch downgrades, withdraws Anheuser-Busch ratings



NEW YORK / BUISINESS WEEK



Fitch Ratings on Wednesday downgraded several credit ratings for Anheuser-Busch Cos. Inc. and then removed the company's ratings because it will soon be sold to InBev.



The agency removed the maker of Budweiser and Bud Light from Watch Negative and downgraded the long and short-term Issuer Default Ratings for the company.



Fitch also said it was downgrading outstanding debt ratings for the company, which announced in July it was accepting a $52 billion buyout from the Belgian brewer.



Fitch said in a news release it has downgraded the Issuer Default Ratings to 'BBB' from 'A' and short-term IDR to 'F2' from 'F1.' The ratings agency also downgraded Commercial Paper to 'F2' from 'F1.' Both bank credit facilities and senior unsecured notes were downgraded to 'BBB' from 'A' as well.



Fitch said the rating outlook is negative and it has subsequently withdrawn the company's ratings.



READ MORE/ENTIRE ARTICLE:

http://www.businessweek.com/ap/financia ... VO6V83.htm

http://www.stltoday.com/stltoday/busine ... enDocument





New article, thought I'd post link.

^ It's interesting to note that Peacock is from marketing. This indicates that A-B owes its primary success to marketing prowess. From what I read, Peacock appears to be a solid individual and a great leader. Good for them.

InBev, A-B deal still on track despite credit market woes



http://www.stltoday.com/stltoday/busine ... enDocument

Several analysts say the gargantuan buyout has become a heavier burden for InBev. The company's stock has been hit by slumping stock indices, a stronger dollar and the prospects of a big stock offering that would dilute shareholders' ownership.



InBev shares have dropped by more than a third since the A-B deal was announced in mid-July. A-B is now worth twice as much as InBev by market value — the stock price multiplied by the number of shares.



The Belgian company looks like "a minnow swallowing a whale," Gimme Credit bond analyst Craig Hutson wrote last week. InBev's shrinking value meant it would have had to flood the market with shares to reach $9.8 billion. Its main shareholders in Belgium and Brazil would have lost control of the brewer. The plan was shelved two weeks ago.



"It's become a very expensive deal" for InBev, said Hutson. InBev negotiated for A-B when companies' valuations compared to earnings were "significantly higher than they are now. It becomes significantly harder to justify," he said.



The margin for error after the deal closes will be far slimmer, and InBev will have to move fast to cut costs and increase sales to make the deal pay off, Hutson said. It will take the market longer to recognize the benefits of the deal.



Speculation that InBev could try to renegotiate the takeover price spread through Wall Street last week. But InBev would not open that can of worms unless it had no other option, analysts said.



Anheuser-Busch's board, which rejected InBev's first offer of $65 a share, would presumably resist a "re-cut." Anheuser-Busch shareholders, who are expected to support the buyout by huge margins when they vote on Nov. 12, would have to weigh a less generous offer. "All hell would break loose," said Gilpin.

^the above article in the Post really paints a bleak picture of the deal. Makes me think that the layoffs and cost cutting will be worse than once anticipated. I feel sorry of AB employees, especially white collar employees. I was at Blues City Deli for lunch recently and I could not help but overhear multiple AB employees saying things like "he's gone after the takeover" "I bet all be gone in 6 months" and other conversations along those lines. It is a miserable thought to go from working at the a great place, to working for a cost cutting slave driver of an organization or getting layed off completely. Sad !!!

^ Perhaps they should blame leadership for allowing InBev to rise so far so fast. They used to be the King of Beers. Now they're just the Queen and they're getting married to the new King. What happened?



None of the BUD employees in my MBA class seem worried about potential layoffs.

^ Perhaps they should blame leadership for allowing InBev to rise so far so fast. They used to be the King of Beers. Now they're just the Queen and they're getting married to the new King. What happened?



None of the BUD employees in my MBA class seem worried about potential layoffs.

I think leadship is TOTALLY to blame. AB left themselves open by not taking steps to prevent takeover. AB has been ripe for the picking for years. Only now that the economy is bad, can INBEV finally complete their dream takeover. AB should have had provisions in place such as poison pills and board terms. This would have prevented INBEV from replacing the board. They also should have grown internationally on their own and bought smaller, weaker companies, instead of tip-toeing around the idea of vast globalization. I blame leadership 100%.



All of my friends that work there say, the closer you are to the beer, the better off you are. None of those people are worried. Long term, no white collar job is safe. There is great concern from those people. They are all taking a wait and see approach, but the fear is always there. I wish them all the best of luck and hope that this major operation is here in STL for generations to come. Unfortunately, I am not counting on that.

innov8ion wrote:^ Perhaps they should blame leadership for allowing InBev to rise so far so fast. They used to be the King of Beers. Now they're just the Queen and they're getting married to the new King. What happened?



None of the BUD employees in my MBA class seem worried about potential layoffs.

If i'm not mistaken, AB is still the KING. In one article I read recently they compared this take over to a minow trying to swallow a whale... or something like that.

^Yes. A few posts up.



That was referring to the current market cap of the two companies. InBev has lost much of its value in the market downturn, while BUD, for obvious reasons, has not.

Moorlander wrote:

innov8ion wrote:^ Perhaps they should blame leadership for allowing InBev to rise so far so fast. They used to be the King of Beers. Now they're just the Queen and they're getting married to the new King. What happened?



None of the BUD employees in my MBA class seem worried about potential layoffs.

If i'm not mistaken, AB is still the KING. In one article I read recently they compared this take over to a minow trying to swallow a whale... or something like that.

Only because A-B is artificially propped up. They'll likely lose 25-40% in market capitalization if the deal breaks. InBev has lost about 50% of their value in the last 6 months, part of that from the A-B bid and part from the global recession. So A-B is still likely Queen either way you look at it.

Looks like the massive layoffs will start at the top and trickle down to the lower level employees....Let the layoffs begin!!!





http://www.stltoday.com/stltoday/busine ... enDocument

It's over for Anheuser Busch Incorporated. .....SAD day!!!!!!



Since 1852 AB has been brewing beer as an independant company in

St. Louis. I realize business is business, especially in this global economy, but we have lost a piece of our local history, an American icon.





http://www.stltoday.com/stltoday/news/s ... enDocument

From the CNN article......



"The combined company's headquarters will be in St. Louis, where Anheuser-Busch was based."





WHAT?????? :-s

^as much as I'd like to believe they are moving corporate headquarters from Belgium I think that CNN quote refers to InBev's North American HQ.

CNN wrote:"The combined company's headquarters will be in St. Louis, where Anheuser-Busch was based."

I saw that too. If that's true, it's (great) news to me. If not, CNN shouldn't tease a city that's lost so many headquarters over the years.



I'll raise a bottle of Budweiser (or Stella Artois?) and toast the Brazilian-Belgian overlords as well. I just wonder how many hoosiers are going to boycott A-B products and start drinking Miller and Coors. And I hope this deal is much better for St. Louis than the one that combined Macy's (then Federated) with May Company.