Customer Reviews

Dethroning the King: The Hostile Takeover of Anheuser-Busch, an American Icon

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"Dethroning the King" reports how Budweiser (Anheuser-Busch - A-B), an American icon built up over 150 years to a 52% U.S. market-share, was lost to Brazil's InBev (headquartered in Belgium) in just 7 weeks. Thought to be 'too big to buy,' it instead proved 'too slow to act.' Company loyalists probably thought the Busch family could prevent a hostile takeover - however, they collectively only owned 4% of the stock, less than Warren Buffett (5%).

August Busch (A.B.) III, the former highly-respected A-B CEO, had stepped down in 2002. Known for his attention to detail, especially quality and brand image, he had over-focused on beating Miller in U.S. market share, largely ignoring foreign opportunities. (A-B did own part of both a Chinese [Tsingtao] and Mexican beer [Grupo Modelo] producer.) His son, August Busch IV, unfortunately was known for vitriolic disputes with his father, lacked the board's confidence, and often was AWOL from his leadership duties. The takeover danger had been spotted at least two years prior, but little was done in defense until too late - $500 million/year ($1 billion at another point - unclear which they really committed to) in savings (including 1,185 positions), identified the day InBev made its offer.

InBev was created by the 2004 combination of Brazil's Ambev and Belgium's Interbrew. The takeover cost InBev $70/share, in cash (A-B stock was in low $50s when InBev began pursuit; initial offer was $65/share), and created the world's largest beer company with about 200 brands. InBev changed its name to Anheuser-Busch InBev to maintain A-B's heritage and stifle opposition; it also decided to site its N.A. headquarters in St. Louis.

In late 2006, A. B. IV was about to become CEO, and wanted to ink a joint venture with InBev (make A-B the exclusive U.S. importer of InBev's European brands). This would be his first big initiative, and help cement his CEO spot. He succeeded, but failed to include the standstill clause A.B. III wanted that prevents partners from making moves toward an unsolicited takeover. A.B. III allowed it to proceed at the board level, nonetheless. The agreement allowed InBev people to see the excessive corporate overhead and where to make cuts.

A-B board members had numerous conflicts of interest - with Enterprise Rent-A-Car that it did extensive business with, with the head of one of its distributors, and interlocking board memberships (eg. Ed Whitacre at AT&T was on A-B board; A.B. III was on AT&T board and had been key in Whitacre getting a generous pay package). The board neglected to try to tie up banks that might be called on by InBev for funding, had destaggered board terms but failed to require that dismissing the entire board couldn't be accomplished without some sort of infraction, its poison pill provision had expired, and the Busch family had neglected to establish a two-tier shareholding structure that allowed them to maintain control without a majority of shares.

A-B management did explore one defense - buying the rest of Grupo Modelo to make themselves to large for InBev to aquire. Between Modelo demanding too much, and A.B. IIII being uninterested, this went nowhere.

Side Note: Ex-AT&T CEO Ed Whitacre who later became CEO of G.M. was also a member of the A-B board - their inept performance should have disqualified him from involvement with and leadership of G.M. after the restructuring.

InBev immediately implemented zero-based budgeting upon takeover, planned $1.5 billion in cost cuts, and now plans $2.25 billion in annual savings by 2011. The New CEO, Carlos Brito, stayed at the Holiday Inn after flying coach from New York. Payables days have been extended - sometimes from 30 to 120 days. First-class travel became coach class, stays at expensive hotels became much cheaper locales, cushy, private offices became a sea of community tables and tightly packed desks, luxurious furniture was auctioned off, free beer and tickets to Cardinals games and Busch Gardens ended for all employees, numerous sports events sponsorships ended, and Grant's Farm is now only open weekends. Improved water efficiency (30%) is planned. In October, 2009, plans were announced to sell Busch Entertainment (SeaWorld) and A-B's corporate jets; Busch's share of Tsingtao Brewery was also sold. More than 1,500 jobs have been cut - many in sales and marketing (U.S. volumes fell 4.8% first-half of 2010). It's still carrying over $40 billion in long-term debt.

Bottom-Line: Having a excellent product, market share, and brand value is not enough in the era of globalization. The result was a sad event for America.

"Dethroning the King" is a thoroughly researched and well-written chronicle of the rise of Anheuser-Busch and its eventual sale to the international brewer, InBev, in the largest-ever cash acquisition.

The first third of the book focuses on the personalities of the three generations of Busch leaders that ruled A-B for the last 80 years. This section is filled with rich anecdotes of inter-family power grabs and contrasting personal and professional management styles. For those not familiar with the Busch dynasty, the stories are fascinating and make for a good read. Following an effective set-up of the main characters, the author profiles what made A-B so successful in its meteoric rise from roughly 20% of the U.S. beer market share in the mid-70s to ultimately capturing 52% by 2002. It was interesting to see how the single-minded focus of A-B's CEO, August Busch III, and the effective advertising campaigns of the 90s helped cause such dramatic results.

Beginning around 2006, however, A-B's management hubris, a massively out-of-market cost structure and extremely insular thinking made the company vulnerable to a foreign takeover attempt. The last one-third of "Dethroning the King" tells a blow-by-blow narrative of how the takeover was planned, financed and executed. The author takes the reader into the Board rooms of both "hunter" and the "hunted" and even manages to save a couple of surprises for the end.

Similar to "The Smartest the Guys in the Room" which told the fall of Enron, in "Dethroning the King" the readers know the end result even before picking up the book yet this does not diminish one's enthusiasm for hearing all of the details of the story. The author's pace is well balanced, and the book is challenging to put down after beginning.

First and foremost this is a great book about a contested corporate takeover. It's not about brewing beer, marketing, advertising, pride, tradition, loyalty or anything else that made Anheuser-Busch great -- it's about a bunch of corporate lawyers and financeial bean counters who spin around the world on private planes reading financial statements and fine print. It's also a textbook case about the fall of a small part of the American empire. It could have been titled "Take The Money and Run" -- except that already was a title from a Woody Allen movie in the 1960's.

"Dethroning the King" is also about loss because almost every involved in this sad takeover tale is a loser. Carlos Brito of InBev seems like a winner but he overpaid for the dethroned "King of Beers" and hastened the devaluing of one of the most iconic brands in the world. August Busch III is a loser who made a lot of money, built a hugely successful company but ended up as a solitary jerk trusted and loved by nobody (though respected by all). Busch the Fourth is a nice guy in way, way over his head, somebody who should have been managing a beer wholesaler in a mid-level market. The financiers involved in the story are all from collapsed and disgraced -- though bailed out -- firms. The Board of Directors of the former Anheuser-Busch come off perhaps the worst of all, self-interested, lazy corporate yes-men who never created a job and wouldn't know a real Budweiser from a warm pitcher of spit. St. Louis and the rest of the USA are also big losers as another hometown hero company bites the dust.

This is not a fun read and the author probably indulges in too much psychobabble about the father-son drama between the reptillian Busch III and the hapless Busch IV. Dethroning the King is about more than the boring Busch'es -- it's about what made America great and how greed destroyed it. I shudder to think what August Busch Jr. would think if he read this book, it's almost enough to make a real American wish for prohibition again. Read it, weep, and let's learn from this sad tale of greed and loss.

This is an awesome book and should have lots of crossover appeal. It's written in a way that sucks in the diehard business types, but doesn't leave the average person confused. People here in St. Louis are buzzing about the potential that this could become a hit move (like the blind side for lewis). This is a drama full of interesting characters and fascinating stories...future best seller!

As an AB employee for ten years, this has been a heart-wrenching but eye-opening read. Our region office fell victim to the cost-cutting measures AB implemented in 2007 while trying to save themselves. These past few years, I have blamed the loss of the company on the Fourth, but it turns out that he never had a chance. His father, with his unbelievable arrogance and close-mindedness, did all the damage and it was too late to fix it. And to watch InBev buy a company that was the industry-leader and work diligently to bring it down to middle-of-the-pack status is mind-boggling. It is all such a shame and to learn that it could have been prevented had the Third just swallowed some stupid pride makes my heart hurt.

MacIntosh's book is a fascinating look behind the scenes of a story of an American business tragedy. When InBev started looking around for a target for its efforts at globalization, Annheuser Busch was ripe for the picking. The author details why with a reporter's detailed interviews and a novelist's approach to storytelling! It is a compelling book not to be missed!

Dethroning the King is well researched and well written. It is pretty unbelievable that a non-fiction book can be written in such a way that you can't put it down, but MacIntosh has managed to do just that. I enjoyed the depth the book goes into in describing the cast of characters which are, as you may expect, larger than life.

As a former employee of A-BI I found the book to be right-on with regards to the events that occurred before, during and after the takeover, and with the descriptions given of the key players and their personality traits. The book is an easy read and not as in-depth as I had expected. However, for one who wants to learn about the culture of the former "King of Beers" and the traits of the key players in that company it is a must read.

Great book, excellent service - I worked for A-B for 32 years as Sr. Exec - extremely accurate, good read.

I worked for A/B for many years and in my many trips to St. Louis I was always impressed with the grandour. When I traveled on business the policy was the best of hotels, meals, etc. It was of the utmost importance to impress the customer that we were a first class company. My department head would sometimes give me tickets to events such as NASCAR, Indy, football, etc, so I could distribute them when needed to make problems "go away". I recall as the market share of their product kept growing and when it reached 50% it was hard to believe. But when we realized that some of the sales results and reported profits were "adjusted" by some creative bookkeeping we knew it was only a matter of time.The book does go into detail as to what the major players were doing to forstall the obviuous. Still, the end is kind of sad. But a very interesting book nonetheless.