Pride or Prejudice?

Tuesday, June 17. 2008

InBev's proposed acquisition of Anheuser-Busch has become political; whether as a matter of national pride or national security remains to be seen. Most would argue the former, but I believe, and I think most enjoyers of domestic brews would agree with me, the latter is the better reason. While I'm going to take some flack from the beer-snobs in the office, there's nothing better than spending a hot summer day outside sipping on a hopsy rice brew.

Sen. Claire McCaskill, the Missouri Democrat, has reportedly told Carlos Brito, InBev's CEO, that she's against the deal and will do anything she can to oppose it. That makes sense from the standpoint that all politics are local and the locals are upset by the proposed buyout given Anheuser's very active involvement in the local community. When the news of the proposal first hit the wires, I actually heard a story on NPR where local St. Louis-ites were singing Anheuser's praises for donating kegs for church picnics and pumping money hand over fist into local charities.

But I think US Senators entering the fray to oppose the deal is a bit over the top. I understand the concerns; InBev has a reputation for taking over local brands and then implementing ruthless cost-cutting measures. I get the fact that a locally owned and operated company will probably maintain a higher level of civic involvement. But business is business, and if there aren't national security or competitive issues involved, politicians should keep to the sidelines.

I'm of the opinion that InBev is more interested in making broader inroads in North America through an established distribution network, which Anheuser definitely has. In fact, Anheuser has already been distributing several InBev brands for years, so from that standpoint the deal makes perfect sense. Why pay someone else to do the legwork, when you can just buy them out and make money regardless of whether the brew's coming in or going out. And while there would definitely be some job cuts at middle-management levels and higher where responsibilities begin to overlap with headquarters, I wouldn't expect the clock-punching production workers to see their jobs disappear. InBev has a history of taking over local brands and maintaining local production, so the US brewery would continue brewing and as long as the demand for Bud products justifies Bud's payrolls, there shouldn't be any major changes.

So with an offer of $65, I'd expected BUD shareholders to jump on the chance to pick up a nice premium on their holdings. That makes the only real obstacle to the deal politicians who don't appreciate the fact that free trade runs both ways. I guess McCaskill would face some uncomfortable questions when elections roll around, but hey, she's a politician. She should be a master of making it look like she's doing something when she's really not, so hopefully she'll have the sense to make a lot of noise without creating any barriers. If Anheuser decided they wanted to buy a European brewery and met with this level of resistance, I'd hate to work for the WTO when the filings started flying.

Posted by Ben Shepherd at 18:50 | Comments (0) | Trackbacks (0)

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