Photograph by Kevin A. Roberts
Julie MacIntosh’s new book, Dethroning The King: The Hostile Takeover of Anheuser-Busch, An American Icon, is a detailed account of the 2008 battle that led to InBev, the Belgian-Brazilian company, buying Anheuser-Busch. MacIntosh, a former mergers-and-acquisitions correspondent for the Financial Times, reconstructs the history of Anheuser-Busch that begins with the reign of August Busch III as CEO. While the Budweiser brand grew almost exponentially, grabbing roughly half of the domestic beer market, MacIntosh notes ways that the company failed to plan for a global future.
“Let’s face it, anybody can brew beer,” former D’Arcy Masius Benton & Bowles ad agency creative chief officer Charlie Claggett tells MacIntosh. “It’s just a matter of who has the most money and power.”
You covered the InBev takeover for the Financial Times. What convinced you to write a book about it?
I’d spent five years on the [mergers-and-acquisitions] beat, and I knew a really interesting deal when I saw one. It was the combination of a formerly family-run company that the family had lost control of and a firmly entrenched former CEO who still wielded a lot of power. And then you have August IV trying to assert himself.
What’s the most important thing that you learned in writing this book?
That the board was really maligned by a lot of media, for really superficial reasons. I really think that the board did what they had to do. You can certainly argue that they could have put up a fight for longer…but in the end, thank God for them that they did capitulate when they did, because they might not have had a chance to accept a bid a month later… By the time InBev made its bid, the board had very few options, so I think to say that they should have tried much harder is almost beside the point. If they were going to fix things, they should have done things several years sooner.
How would they have done that?
I really think the board needed to have pushed much harder for August III and [then-chairman] Pat Stokes to be more global in their approach to the beer business.
Had Anheuser-Busch bought Grupo Modelo as a way to keep InBev away, as it had considered, do you think St. Louis would have been better off today?
I think that there would have been fewer layoffs, so in that regard, probably. And I think that the pride of St. Louis would have been more preserved.
Do you think the Grupo Modelo buyout fell apart the way it did primarily because of August III’s lack of enthusiasm?
I would say largely yes. I think there’s a little bit of factual evidence you can point to, to say maybe Modelo would have happened if III hadn’t been against it, which is that Sandy Warner, who was maybe the most powerful member of the A-B board, was in favor of Modelo right up until the end… I think III was a stronger kind of force in the end, and that, combined with InBev’s bid, killed it.
I get the sense from the book that what happened to Anheuser-Busch ultimately is sort of what happened to other iconic American businesses: It was overtaken by the more cost-conscious forces of globalized business.
Absolutely. And I think this is cautionary for American companies. Now is not a time to rest on your laurels. And even in relation to this group of Brazilians [who run InBev]: They’ve just bought Burger King, an American company that probably could have done more in terms of expansionary measures, especially overseas, and now they’re going to do that for them, because [Burger King] didn’t want to do that themselves.
There seems to be another possible culprit in the loss of Anheuser-Busch’s independence. Harry Schuhmacher, the publisher of Beer Business Daily, an online newsletter based in Texas, says in your book that Anheuser-Busch missed the boat on globalizing due to “a Midwestern culture of conservatism, insularity, and cronyism.” How big of a role did that play, do you think?
I think that the cronyism can happen anywhere, so I don’t ascribe that to being a Midwestern trait—particularly because I was raised in Michigan, so I am Midwestern. I think the conservatism is more easily entrenched in the Midwest because you’re far from the coast, so it was easier for people in the company to swallow the company line; they weren’t speaking other languages or looking beyond borders.
There are quite a few anonymous sources in your book—and they’re the ones who have the most damning things to say about August III and August IV. How comfortable should we be with that anonymity?
Part of the way that I and most [mergers-and-acquisitions] correspondents have covered M&A is on background, because that’s a beat that you could argue would never get covered if you didn’t do that… I felt pretty strongly that the book would not tell the whole story unless I granted some people anonymity for that very reason. I didn’t want to just have six or seven people who are willing to be named giving me their perspective, because then it lends more bias than I’m willing to reflect.
What’s the most surprising thing you learned in your research?
The extent to which the relationship between August III and August IV was fractured... I did not understand how much that affected the board of directors. I did not know that the board of directors had to referee
their arguments.
So what is the deal with August IV? From what you’ve written, it seems like he’s missing in action at key times. Yet he’s the CEO.
I think there are certainly plenty of currents beneath the surface there. Every once in a while, he’ll talk out of turn, like he did in that one Wall Street Journal article, and reveal how pained he is emotionally.
In your book, one unnamed source even speculates that in the midst of critical decision-making during the takeover, August IV was on drugs.
I heard those kinds of speculations from several people. I thought it was relevant because people took that away from the meeting.
What are the best things that you can say about August IV’s leadership of Anheuser-Busch?
He had a more global perspective than his father did; he understood that Anheuser-Busch had fallen behind, and he seemed to know that the situation was dire. And there was more to his life than just the company, although in many ways that was kind of a negative, too, because of his playboy image and the fact that he was perceived as an absentee CEO; he had a little bit more well-roundedness, but that was also his Achilles’ heel.
Let’s talk about August III: What sense of his character and personality did you get in writing this book? One unnamed company insider in your account calls him “pigheaded.”
I think you can be a brilliant manager and also be arrogant and pigheaded. That’s why I found him to be a fascinating character… August III was a brilliant CEO for many, many years, and he built Anheuser-Busch into what it was for many years—Budweiser was an American icon. So I think he had difficulty letting go, just because he had ridden that wave upward and didn’t want to see it drop off. But I also think he understood what was happening with the markets… I think day in and day out, there was a pretty big struggle there: “How much do I step in to try and fix things? Is it beyond my control? Can I control it? Should I?”
Is he a tragic figure?
Well, I think there are many worse things in life than having your company taken over. There are worse things that can happen than handing people $70 a share in cash.
Do you think August III really wanted to sell the company?
I don’t think he wanted to sell it years ago, but I think that once the situation progressed past a certain point, he realized that was the least bad solution. Although a lot of the reason it progressed past the point of no return in the first place was because he allowed it to. And then he just became rational. He might have regretted that it came to that point, but there was nothing he could do it about it then… And he stood to make a lot of money. And some of his employees stood to make a lot of money… And some of them stood to get fired.
Do you think the company would have shrunk as much, through layoffs and cost-cutting, had it not been bought by InBev?
I know the city of St. Louis feels very angry about the layoffs, but Anheuser-Busch would have shrunk from layoffs whether or not the sale happened. There would have been layoffs and it would have been painful. The minute InBev made its bid, there were going to be layoffs and cost-cutting. I think it would not have been quite as deep as with InBev, but it still would have been painful. And then, right now, they could have been getting bid on by SABMiller. There was a certain inevitability that was kicked into gear the minute the rumor came out that the InBev bid was made, and that would have resulted in job cuts for sure.
How did the InBev takeover ultimately affect St. Louis?
I think people there are probably looking back at this and are far less angry now and just more sad. The sense I get is, it just feels like there’s kind of a hole there now where Anheuser-Busch used to be.
How do you think the sale of the company will be viewed further in the future—say, historically?
I think it’ll sort of meld into the pool of all the other corporate brands that were once American and now are not. But InBev is going to do its very best to make it seem like Budweiser and all the other brands are still as American as possible. So from a consumer standpoint, it’s going to be a little bit of a slow bleed, and over time there’ll be slowly diminishing loyalties to Budweiser and other Anheuser-Busch products, but it’s going to be tough to say how much you attribute that to the sale and how much you attribute that to people’s changing tastes… The global beer market is becoming commoditized. Anheuser-Busch InBev now sells nearly one out of every five beers consumed globally, so they’ve become the Coca-Cola of beers, as they’ve said they wanted to be. And the question is, is that going to be what consumers want, or are they going to be looking for something more special?
