Table of Contents
Title Page
Copyright Page
Dedication
Epigraph
Cast of Characters
Anheuser-Busch
InBev
Grupo Modelo
Author’s Note
Prologue
Chapter 1 - The Game Is Afoot
Chapter 2 - Crazy and Lazy at Loggerheads
Chapter 3 - The Colossus
Chapter 4 - Selling the American Dream
Chapter 5 - The Fourth Abides
Chapter 6 - The Hunter’s Frozen Trigger Finger
Chapter 7 - A Babe in the Woods
Chapter 8 - The Old Gobi Desert Trick
Chapter 9 - Mr. Brito Goes to Washington
Chapter 10 - Angry Bedfellows
Chapter 11 - The Board: August, August, and Augusta
Chapter 12 - The Montagues and the Busches
Chapter 13 - A Seller from “Hello”
Chapter 14 - Put Up or Shut Up
Chapter 15 - A Long Way from St. Louis
Chapter 16 - A Toast on Both Sides
Chapter 17 - Cash Out or Hunker Down
Epilogue
Notes
Acknowledgments
About the Author
Index
Praise for Dethroning the King
“A Foolish Book Recommendation for July.”
—The Motley Fool
“How the Busch clan lost control of an iconic American beer company. If ever an American company represented the land of milk and honey for corporate executives it was Anheuser-Busch . . . For decades a palace of well-paid vice presidents in cushy offices presided over the manufacture of Budweiser, America’s beer, in that most American of cities, St. Louis. ‘Few companies on earth were more evocative of America, with all of its history and iconography, than Anheuser-Busch,’ writes veteran Financial Times journalist Julie MacIntosh in her strenuously reported book, Dethroning the King: The Hostile Takeover of Anheuser-Busch, an American Icon. As the title suggests, the reign of the King of Beers ended in the summer of 2008, when the company merged with the Brazil-based brewing giant InBev, an outfit about as culturally different from Anheuser-Busch as one could imagine. At $70 a share, or $52 billion, it was the largest all-cash acquisition in history and even more noteworthy because it occurred during the gathering storm of a global financial collapse . . . When growth-hungry InBev arrives on the scene, a company so lean and cost-conscious that they’re called the Walmart of brewers, all hell breaks loose at the complacent Anheuser-Busch headquarters. The Brazilians make a pitch of $43 billion in what’s known on Wall Street as a “bear hug”—an offer so generous that the recipient can’t refuse. But A-B’s board does refuse, triggering weeks of moves and counter-moves and endless end-gaming by the two companies. Ms. MacIntosh relates every gambit in crisp, scene-by-scene detail.”
—The Wall Street Journal
“Ms. MacIntosh . . . earns extra credit for staying on the Anheuser-InBev case despite considerable macrocosmic distractions . . . The author’s persistence pays off in her account of the Busch family’s searing internecine strife . . . Dethroning the King makes for a fine yarn with a cautionary message about American business in the age of globalization. InBev began laying off workers less than a month after the deal formally closed, Ms. MacIntosh reports. Maybe the next time a foreign entity tries to acquire a major American family company, the public will take notice before it becomes a fait accompli.”
—The New York Times
“There’s a lesson for all in book on brewing . . . a great read.”
—Morning Advertiser
“Dethroning the King. . . . is the compelling play-by-play of InBev’s takeover of Anheuser-Busch. Give MacIntosh a Stella Artois for her excellent reporting.”
—Stltoday.com
“Dethroning the King is a brutally detailed look at the hostile takeover of Anheuser-Busch, the legendary icon that at one time was the epitome of American business success. It is a story that may well go down in American business history as one of the defining moments of this era. [An] insightful and brilliantly written work. As American business continues to dramatically change, this compelling book should be on every businessperson’s reading list.”
—Business Lexington
“In a narrative that reads as fast as any fiction thriller, Financial Times journalist MacIntosh details the 2008 takeover of the iconic Anheuser-Busch brewing company by Belgian corporation InBev, focusing particularly on the company’s importance to the St. Louis region; its management, or lack thereof, by the Busch family (particularly the August Busches III and IV); and the broader unsettled economic climate of 2008.”
—Library Journal, naming Dethroning the King one of the best business books of 2010
Copyright © 2011 by Julie MacIntosh. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-Publication Data:
MacIntosh, Julie.
Dethroning the king : the hostile takeover of Anheuser-Busch, an American icon / Julie MacIntosh.
p. cm.
Includes index.
ISBN 978-0-470-59270-0 (cloth); ISBN 978-1-118-15702-2 (pbk);
ISBN 978-1-118-20281-4 (ebk); ISBN 978-1-118-20282-1 (ebk);
ISBN 978-1-118-20283-8 (ebk)
1. Anheuser-Busch, inc. 2. Busch family. 3. Consolidation and merger of corporations—United States. I. Title.
HD9397.U6B87 2010
338.8’3663420973—dc22
2010032279
To my husband, Micah, for his limitless support and patience, and to Miller, for arriving at exactly the right time
“It behooves a father to be blameless if he expects his child to be.”
—Ho
mer
Cast of Characters
Anheuser-Busch
Board of Directors
August A. Busch III: former Chairman, President, and Chief Executive Officer
August A. Busch IV: President and Chief Executive Officer
Carlos Fernández González: Chairman and CEO of Grupo Modelo
James J. Forese: former Chairman and CEO of IKON Office Solutions
Ambassador James R. Jones: former U.S. Ambassador to Mexico; former Chairman of the American Stock Exchange
Vernon R. Loucks Jr.: Chairman of The Aethena Group; former Chairman and CEO of Baxter International
Vilma S. Martinez: Partner, Munger, Tolles & Olson; later named U.S. Ambassador to Argentina
William Porter “Billy” Payne: Vice Chairman of Gleacher Partners; Chairman of Augusta National Golf Club
Joyce M. Roché: President and CEO of Girls Incorporated
General Henry Hugh Shelton: former Chairman of the Joint Chiefs of Staff
Patrick T. Stokes: Chairman of Anheuser-Busch, former President and CEO
Andrew C. Taylor: Chairman and CEO of Enterprise Rent-A-Car
Douglas A. “Sandy” Warner III: former Chairman of J.P. Morgan Chase
Edward E. Whitacre Jr.: Chairman Emeritus of AT&T; later named Chairman and CEO of General Motors
Executive Officers
W. Randolph “Randy” Baker: Chief Financial Officer
Robert Golden: head of Mergers and Acquisitions
Francine Katz: head of Communications and Consumer Affairs
Robert Lachky: head of Global Industry and Creative Development
Douglas Muhleman: head of Brewing Operations and Technology
David Peacock: head of Marketing
John “Jack” Purnell: former Chairman and CEO of Anheuser-Busch International
Gary Rutledge: head of Legal and Government Affairs
Thomas Santel: President and CEO of Anheuser-Busch International; head of Corporate Planning
Pedro Soares: aide to August Busch IV; former head of Anheuser-Busch Mexico
Other Key Players
Charles “Casey” Cogut: Partner, Simpson Thacher & Bartlett
Joseph Flom: Partner, Skadden, Arps, Slate, Meagher & Flom
Peter Gross: Managing Director, Goldman Sachs
Timothy Ingrassia: head of Americas Mergers and Acquisitions, Goldman Sachs
Leon Kalvaria: Global Head of Consumer and Health Care Banking, Citigroup
Kenneth Moelis; founder, Moelis & Company
Larry Rand: co-founder, Kekst & Company
Jeffrey Schackner: Managing Director, Citigroup
Paul Schnell: Partner, Skadden, Arps, Slate, Meagher & Flom
InBev
Executives and Board Members
Carlos Brito: Chief Executive Officer
Jorge Paulo Lemann: Director and key shareholder
Carlos Alberto da Veiga Sicupira: Director and key shareholder
Marcel Herrmann Telles: Director and key shareholder
Other Key Players
Francis Aquila: Partner, Sullivan & Cromwell
Douglas Braunstein: head of Americas Investment Banking, J.P. Morgan
Steven Golub: Vice Chairman, Lazard
Steven Lipin: Senior Partner, Brunswick Group
George Sampas: Partner, Sullivan & Cromwell
Antonio Weiss: Vice Chairman of European Investment Banking, Lazard
Grupo Modelo
Executives and Board Members
María Asunción Aramburuzabala Larregui de Garza: Vice Chairman of the Board, granddaughter of one of the company’s founders
Carlos Fernández González: Chairman and CEO of Grupo Modelo; great-nephew of one of the company’s founders
Antonino Fernández Rodríguez: Honorary Life Chairman, former CEO
Other Key Players
Joele Frank: Managing Partner, Joele Frank, Wilkinson Brimmer Katcher
Robert Kindler: Vice Chairman of Investment Banking, Morgan Stanley
David Mercado: Partner, Cravath, Swaine & Moore
Author’s Note
Two months after this book first hit the shelves, a 27-year-old aspiring beer model was found dead of a drug overdose in August Busch IV’s bed. What had already been a rough two years for the former Anheuser-Busch CEO and notorious playboy became nearly unbearable, as hordes of reporters descended upon his mansion in St. Louis to investigate—alongside police—whether he was implicated in the woman’s death. The takeover of Anheuser-Busch during his tenure had already been of keen interest to many Americans. Then suddenly, August IV himself became television news’ hottest topic, and people were poking around in his brain in an attempt to understand why such a fortunate man continued to live a life so close to the edge.
The scandal rattled around the nation’s news cycle for months as St. Louis authorities released toxicology results, prosecutors weighed whether to charge August IV in the woman’s death, and members of her broken family fought over who had the right to sue him. August IV had already borne the emotional burden of the death of another young woman. He was now enmeshed in yet another highly public drama just two years after closing the sale of his family’s former company—an event that had sent him spiraling into severe depression and loneliness.
The summer of 2008, which marked the start of the downfall of August IV’s career at Anheuser-Busch, is one many people wish they could forget. In the immediate aftermath of the collapse of Bear Stearns in March, the global financial markets briefly looked as though they might stabilize. By the time legendary American brewer Anheuser-Busch received a takeover bid from foreign giant InBev in June, however, lenders Fannie Mae and Freddie Mac were teetering on the verge of insolvency and concern was mounting that U.S. taxpayers might end up holding the bag on $5 trillion in mortgage liabilities. The government stepped in to rescue both entities; but just a few months later Lehman Brothers and American International Group (AIG) failed, Merrill Lynch was taken over, and Goldman Sachs and Morgan Stanley came pounding on the U.S. Federal Reserve’s door in need of a life-saving favor. That New Year’s Eve marked the first time I can ever recall hearing a unanimous sigh of relief that the year was over.
I’m one of the lucky few who spent that nerve-wracking summer thinking about beer. I covered InBev’s takeover of Anheuser-Busch as the Financial Times’ U.S. mergers and acquisitions correspondent, and while the newspaper industry wasn’t exactly rolling in cash, I knew as the saga unfolded that I’d have a desk waiting for me in the newsroom as long as the two brewing rivals kept duking it out. Anheuser-Busch capitulated shockingly quickly, however, and since most of the world was distracted by the implosion of the U.S. housing sector and the disintegrating global financial markets, the companies’ battle in the press was short-lived. That’s one of the reasons I felt it warranted further treatment here.
Authors often attest that the books they write are nothing like what they first envisioned—that in the course of reporting one story, the undercurrent of a different tale emerged that spun them off in a new direction. That wasn’t the case for Dethroning the King. As the takeover fight unfolded that summer, it seemed as though each furtive conversation I had with a source hinted at a skeleton in someone’s closet, and hardly any of it went reported at the time. With so much fodder at my fingertips—notes of what went on in the boardrooms of both companies, warped tales about the Busch family, and details of the drama that unfolded behind the scenes on Wall Street—I had a strong suspicion when I pitched this book about where the story was the juiciest. I just wasn’t sure whether I’d be able to unearth enough details to make for a good read. The Busch family scions—and August Busch III in particular—don’t wield the paranoia-inducing power they once did in St. Louis, now that their once-proud family company has been subsumed. But I still worried that I might be cast off like a pariah once I landed in Missouri to start my reporting.
Those fears proved to be woefully misplaced. People were eager to talk ab
out their experiences. Anheuser-Busch played a huge part in the lives of countless Americans, from the company’s employees, distributors, board members, and Wall Street advisors all the way down to the loyal drinkers of its Budweiser beer. Many of those people saw this book as their last chance to get something off their chests, a way to attain a level of catharsis and help lay the company to rest. Several said they’d been hoping someone would document Anheuser-Busch’s collapse, and a few had considered trying to write books themselves before deciding they were still too exposed to the newly-merged company or to former chief executives August Busch III and August Busch IV. People close to both companies told me separately that they had already cast the movie with help from their colleagues. One former Anheuser executive had struggled to decide whether the role of August Busch IV, tortured son and heir to the company’s throne, should be played by Jonathan Rhys Meyers or Robert Downey Jr.
Former employees of Anheuser-Busch met me for breakfast, in their offices and at their local coffee shops in St. Louis, and even graciously invited me into their homes. Each interview was fascinating and colorful, but the time I spent with Anheuser’s legendary marketing guru Michael Roarty tugged hardest at my heartstrings. Roarty had suffered a stroke a couple of years earlier, and I spoke with him in his living room, perched at the edge of his couch so I could hear him whispering from a reclining chair a few feet away. He labored to get the words out, but it was clear his recollections and sense of humor were as sharp as ever. After we finished, Roarty’s graceful wife, Lee, patiently guided me through the lower two floors of their home so I could pore over hundreds of priceless photographs on display showing the two of them standing with glitterati like Paul Newman, Frank Sinatra, Liza Minnelli, Lucille Ball, Joe DiMaggio, and former presidents George H.W. Bush and Ronald Reagan. It was an impressive display of the power big-spending Anheuser-Busch wielded in the United States. I drove away from the Roarty house grateful that I had decided to write this book, and remembering all the reasons I had decided to become a journalist in the first place.
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