She Was A Diver, And She Was Always Down

Well, Superbowl XVL is over, and this year I really watched absolutely none of it; I haven’t even seen the ads, though I know they’re on YouTube already.  I have it from Facebook that the Packers won, whats-her-face sang the National Anthem (and forgot some lyrics), and the halftime entertainment was predictably lousy.  My family went ice skating and then to the venerable (and mostly empty) Towne Restaurant.  And in fact, I wrote the rest of this post last week, but realized it was more timely for today and just decided to hold off on it.  So read on, if bravely!

This week, as per my sort-of directive, I’m going for the ol’ book report post.  It is a book I devoured between Christmas and New Year’s (thanks Mom!), Dethroning the King, by Julie MacIntosh. She relates the story of the Anheuser-Bush takeover by Belgo-Brazillian mega-corporation InBev in 2008, a merger that I think is still the largest cash buy-out in history at $52 Billion, every cent of which was leveraged in the shadow of a slowly collapsing global financial system.  Quite honestly, though it was as dry as you’d expect  for financial reporting in a lot of places (MacIntosh is a writer for the Financial Times), it was generally good reading otherwise and some of the personalities involved are as interesting as any fictional characters ever written; maybe better by virtue of their absolute reality.

Will get you through times of no money...

None more so, perhaps, than August Busch IV, to whom all (even the author) refer simply as “The Fourth”.  I was surprised to learn that he attended as an undergraduate my graduate school alma mater, the University of Arizona, where he managed to “get in a little trouble,” as they say. The big question is of course, was he to blame for the takeover? He certainly was CEO of A-B at the time, but had not been for very long. And despite his evident flaws as a leader, the facts could also be read to suggest that his own father (that’s right: “The Third“) sort of threw him under the bus in a number of ways.  Not the least of these indecencies was The Third’s installation of an interim CEO rather than handing the reins directly to The Fourth upon his retirement in 2002, marking the first time the company had been out of a Busch’s direct control in it’s entire history.  And then even after The Fourth took over formally in 2006, The Third continued to hang around and dilute his son’s power.  As well, August Busch III though having admirably brought the company to a +50% US market share (his ani-Miller obsession was a legendary drive) never looked much beyond the US, missing an opportunity in the 1980’s to merge or at least integrate with the very proto-corporation that would one day absorb the company his grandfather founded.  The poor relationship between the father and son Busch really didn’t serve Budweiser well in the end, and I felt the two kind of seemed to grate on one another like the long sledge of a Mogwai epic, and so there you have the reference in the title.

The beer's free, but the snacks are BYO

But I felt the company itself was a fascinating character study, too.  Sure, a company is a collection of people, but those people, especially under the directive of personalities like the Busch family, create more than a company over 150 years: they create a small but enduring culture.  In the case of Budweiser circa 2008, it was a wealthy and corpulent culture with a slipping shareprice and which was in dire need of some serious budget-cutting and self-examination.  As an example, all the execs traveled 1st class for everything–that was, if they didn’t ride on one of the 9 corporate jets.  (The Third liked to have meetings at the private Lambert-St Louis hangar and also often flew his helicopter into the brewery’s 9th floor landing pad; the Fourth inhabited the soccer-stadium offices more.)  And all the way down the ladder the rewards of being a Bud employee were pretty lavish- all employees had a lot free beer, of course.  They were basically throwing money around, their profits were so high, and they weren’t watching the global consolidation of the industry emerging in Brazil, Belgium, and South Africa.

Still independent, great with spicy food

At the last, true to form, when a fiercely-wrought deal with Mexico’s Grupo Modelo might have expanded A-B’s size out of reach of the quietly hostile InBev, The Third intonated to scuttle the deal and InBev called A-B’s last bluff, raising their price per-share offer from $65 to fully $70 (A-B was trading at $56 at the time); the rest was lawyers and huge exchanges of money, naturally.  An intersting note there is that, had any of InBev’s financiers been unable to meet their monitery obligation and the deal fall though, InBev would have been so indebted to Anheuser that the only legal resolution would have been for A-B to take over InBev!  Thecherous indeed: the deal was hardly ever a sure thing for about 5 months.

It was a great book, and I definitely reommend it for it’s description of the high-finance side of beer and brewing.  Does it contain lessons for CBW?  Well, we do have helicopters in our strategic planning, no question.  RC Helicopters.  I mean- it’s a big, mostly empty space for now!