This case lets students prepare a preliminary analysis of whether InBev’s A-B acquisition was successful. The case includes debt repayment schedules for 2008 and 2009, Selected A-B financial disclosures for 2007, selected InBev financial disclosures for 2007, and selected 2009 financial disclosures for the combined Anheuser-Bush InBev.
The case also includes information on actions that reduced expenses and debt. A-B InBev almost immediately: dismissed many former A-B executives; converted lavish St. Louis executive offices to executive cubicles; substantially reduced charitable contributions, and; unilaterally informed suppliers that payment would be made in 120 days instead of 30 days. The firm also sold its canning operations and Busch Entertainment, a small U.S. brewer (Rolling Rock), and InBev Eastern European brewing operations. It used those funds to reduce its debt and substantially extend the payment schedule for the remaining debt.
Shortly before its June 12, 2008 bid for A-B, InBev’s share price was in the €30.00 range. The acquisition closed on December 12, 2008. On November 24, 2008, InBev’s share price reached a low of €10.32, indicating that the market believed InBev substantially overpaid for A-B. However, InBev’s share price is currently €39.23, so A-B InBev substantially outperformed the market for the period beginning shortly before its A-B bid and ending in mid-2010.
By almost any measure, the acquisition has been highly successful. If A-B InBev successfully overturns the three-tier distribution system throughout the U.S., the acquisition will probably become far more successful.