Weak strategy led Bud into InBev
U.S. lawmakers are appalled at a foreign takeover bid for an American beer icon. The truth is Anheuser-Busch (BUD.N: Quote, Profile, Research, Stock Buzz) was a sitting duck — a lesson in poor strategy that wise managers would do well to learn.
The St Louis-based brewer of Budweiser, now a takeover target of European brewer InBev (INTB.BR: Quote, Profile, Research, Stock Buzz), failed to expand abroad in a meaningful way, so its share price went nowhere over the last five years as it missed growth opportunities.
Missouri senator Claire McCaskill vowed on Tuesday to do everything possible to “stop the sale” of Anheuser which is based in her state.
InBev Chief Executive Carlos Brito promised this week to keep the home of Budweiser, America’s “King of Beers” in St Louis. What he did not say was that Anheuser’s lack of ambition abroad had made it vulnerable.
Anheuser missed chances to expand in South America with AmBev in 2004 and then Bavaria in 2005, and also into the fast-growing Russian beer market faxless payday loans. It only announced plans to build its first brewery outside the U.S. from scratch last year.
“There has been no effective international strategy at all and its expansion abroad has not made a material difference to Anheuser and left it open to a bid,” said one banker who did not want to be named.
Belgian-based InBev, brewer of Stella Artois and Beck’s, launched a $65 a share bid for Anheuser last week, valuing the biggest U.S. brewer at $46.3 billion. The Budweiser and Bud Light brewer has only said it will evaluate the InBev proposal carefully.
SALES STAGNANT, COMPETITORS GEAR UP