The merger will create the world's largest brewer, to be called Anheuser-Busch InBev, with $36.4 billion in annual revenue, easily surpassing the previous No. 1 player, SABMiller.
Bud's new drinking buddies
The brewing behemoth will boast a portfolio led by Bud Light and Budweiser, the world's two largest brands, as well as other brands with significant scale, such as Stella Artois, Beck's, Bass, Michelob, Busch and Brahma.
A-B CEO August Busch IV swore in April a deal would not happen on his watch, and the takeover of A-B appeared to be headed for a long and ugly battle after news of InBev's pending bid first leaked in May.
A-B at first rejected the offer, prompting InBev to bluster about removing its board. A-B wound up suing, accusing InBev of lying in its communications to shareholders.
But the then-inevitable nasty proxy fight never ensued. The two sides returned to friendly negotiations late last week after InBev raised its bid to $70 per share from $65, a massive premium over A-B's long-stagnant share price that its board apparently could not ignore.
And the deal was ultimately completed in a friendly enough fashion for Mr. Busch and one other legacy A-B director to grab seats on the new company's board. In other nods to A-B's heritage, the company's North American headquarters will stay in St. Louis, and InBev CEO Carlos Brito said no U.S. breweries will be closed.
Those points will likely be emphasized as InBev tries to spin the acquisition of Budweiser, which has often resorted to patriotic and at times even jingoistic appeals to position itself as the "great American lager."
But the new entity will unquestionably be run by Mr. Brito, and it will certainly adopt InBev's cultural mantra of zero-based budgeting. That approach ought to be evident quickly, as Mr. Brito said today Anheuser-Busch InBev would cut $1.5 billion in costs by 2011.
A-B had earlier put in place a plan to cut $500 million, and then it doubled its goal in response to InBev's interest. The announcement this morning took that 50% further for the combined companies.
Cutbacks or opportunity?
It seems unlikely that A-B's $1.3 billion marketing budget will survive the coming financial butchery intact, but agency executives said they were hopeful that InBev's plans to expand the Budweiser brand worldwide could create new opportunities.
A-B's primary ad agencies are DDB, Euro RSCG, LatinWorks, Cannonball, Hill Holliday, TBWA/Chiat/Day and Goodby, Silverstein & Partners. It also works with a slew of other shops, many of which are located in and around St. Louis.
Mr. Brito said earlier that he understood how crucial A-B's mammoth sports-and-sponsorship footprint had been to building the Budweiser brand, and noted that no one "would in their right mind change that." But it remains unclear -- and many view it as doubtful -- if those platforms will continue to be utilized to the same degree as in the past.
In a statement, Mr. Brito said: "We are very pleased to announce this historic transaction today, bringing together two great companies that share a rich history of brewing traditions. We are extremely excited about the opportunities that this combination will create for consumers worldwide, as well as our shareholders, employees, business partners and wholesalers."
Mr. Busch added: "This agreement provides additional and certain value for Anheuser-Busch shareholders, while enhancing global market access for Budweiser, one of America's true iconic brands."