ffirs.indd iv 9/9/11 11:04:00 AM 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 execu- tives it was Anheuser-Busch . For decades a palace of well-paid vice presidents in cushy offi ces 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 strenu- ously 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 brew- ing giant InBev, an outfi t 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 fi nancial 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 end- less 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 fi ne 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 ffirs.indd i 9/9/11 11:03:59 AM “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 defi ning 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 fi ction 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 ffirs.indd ii 9/9/11 11:04:00 AM Dethroning the King ffirs.indd iii 9/9/11 11:04:00 AM ffirs.indd iv 9/9/11 11:04:00 AM Dethroning the King The Hostile Takeover of Anheuser-Busch, an American Icon Julie MacIntosh John Wiley & Sons, Inc. ffirs.indd v 9/9/11 11:04:00 AM Copyright © 2011 by Julie MacIntosh. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or autho rization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifi cally disclaim any implied warranties of merchantability or fi tness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profi t or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com. 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 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 ffirs.indd vi 9/9/11 11:04:01 AM To my husband, Micah, for his limitless support and patience, and to Miller, for arriving at exactly the right time ffirs.indd vii 9/9/11 11:04:01 AM ffirs.indd viii 9/9/11 11:04:01 AM “ It behooves a father to be blameless if he expects his child to be. ” — Homer ffirs.indd ix 9/9/11 11:04:01 AM ffirs.indd x 9/9/11 11:04:01 AM Contents Cast of Characters xiii Author’s Note xvii Prologue 1 Chapter 1: The Game Is Afoot 5 Chapter 2: Crazy and Lazy at Loggerheads 23 Chapter 3: The Colossus 37 Chapter 4: Selling the American Dream 57 Chapter 5: The Fourth Abides 77 Chapter 6: The Hunter’s Frozen Trigger Finger 111 Chapter 7: A Babe in the Woods 127 Chapter 8: The Old Gobi Desert Trick 143 Chapter 9: Mr. Brito Goes to Washington 161 Chapter 10: Angry Bedfellows 181 Chapter 11: The Board: August, August, and Augusta 203 Chapter 12: The Montagues and the Busches 241 xi ftoc.indd xi 8/26/11 12:01:42 PM xii contents Chapter 13: A Seller from “Hello” 257 Chapter 14: Put Up or Shut Up 275 Chapter 15: A Long Way from St. Louis 295 Chapter 16: A Toast on Both Sides 311 Chapter 17: Cash Out or Hunker Down 323 Epilogue 341 Notes 355 Acknowledgments 369 About the Author 371 Index 373 ftoc.indd xii 8/26/11 12:01:42 PM Cast of Characters Anheuser - Busch Board of Directors August A. Busch III: former Chairman, President, and Chief Executive Offi cer August A. Busch IV: President and Chief Executive Offi cer Carlos Fern á ndez Gonz á lez: Chairman and CEO of Grupo Modelo James J. Forese: former Chairman and CEO of IKON Offi ce 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. Roch é : President and CEO of Girls Incorporated xiii flast.indd xiii 8/26/11 12:05:22 PM xiv cast of characters 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 Offi cers W.