Questions on The Anheuser-Inbev Takeover and Mergers

  ANSWER QUESTIONS  a. “The Anheuser-Inbev takeover was not risky at all, since the Inbev managers had plenty of experience with takeovers.“ The above statement is false. The Anheuser-Inbev takeover was risky since the Inbev managers lacked the appropriate experience in takeovers. Inbev, a Belgian company, executed a successful takeover of Anheuser-Busch, an American firm in 2008. The takeover was noteworthy not because of its strategic importance and size, but also due to numerous obstacles that Inbev encountered to skilfully close the deal. Contrary to the above statement, Inbev managers did not have the experience to successfully manage Anheuser. In particular, the Anheuser board of directors resisted the takeover since they did not want the Budweiser brand to be owned by a foreigner. Some Anheuser executive leaders were not ready to let the company go, which was a significant obstacle. On that note, it means that they were not ready to collaborate with Inbev, which was challenging for Inbev managers who needed more assistance in managing the merger. The takeover encountered numerous hostile beginnings that made it challenging for Inbev managers to have a smooth transition (Carlsson-Sweeny, 2009). Rumours about the takeover surfaced in the media before the deal was sealed. That further made Anheuser's board of directors aggressive and said that the company was not on sale. Based on the fact that Anheuser’s brand had a strong cultural identification with Budweiser, Americans were unhappy to get the information that one of their favorite brands would be foreign-owned. Although Inbev knew that taking over Anheuser was going against the skepticism of numerous sectors and groups of people, it did not do enough to facilitate the smooth transition. Some Anheuser executives and Americans thought that the takeover would cause the closure of the American breweries and lead to numerous job losses. The Anheuser-Inbev takeover was risky since it was among the largest merger and Inbev managers lacked the experience with takeovers, which entails developing trusting relationships with Anheuser executives for a smooth transition to the American beer market. b. Mergers inspired by vertical integration motives are very rare nowadays, as transaction costs have decreased substantially since the second merger wave. The statement is true. Specifically, a vertical integration merger entails two companies producing distinctive services or products along the supply chain to combine and come up with a final product. Nowadays, mergers that are inspired by vertical integration motives...