New King on the Block

Anheuser-Busch InBev "a stronger, more competitive global company."Anheuser-Busch and InBev early this morning formally announced they are bringing the companies together to form Anheuser-Busch InBev, a juggernaut in the global beer industry.Carlos Brito, the CEO of InBev who will take the reins of the combined organization, in a release had this to say: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. Together, Anheuser-Busch and InBev will be able to accomplish much more than each can on its own. We have been successful business partners for quite some time, and this is the natural next step for us in an increasingly competitive global environment. This combination will create a stronger, more competitive global company with an unrivaled worldwide brand portfolio and distribution network, with great potential for growth all over the world."A-B CEO August Busch IV -- who not long ago had told distributors that A-B would not be sold on his watch --said in the release:"Today's announcement brings new opportunities for Anheuser-Busch and its business, brands and employees. 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. We will leverage our collective strengths to create a truly diversified, global company to sustain long-term growth and profitability. In the United States and Canada, both InBev and Anheuser-Busch have seen significant benefits from our existing relationship and we look forward to replicating this success in other parts of the world."Busch will sit on the board of A-B InBev.In a memo to distributors, quoted by Beer Business Daily and Beer Marketer's Insights, Busch said the move to sell "has been an emotional decision for me." He also praised Brito: "He is a strong leader with high aspirations for how far we can take our business together. I respect him and he has my firm backing on these plans and in the operation of the company."And what a company it will be. A-B InBev will be, once the deal closes, by far the biggest brewer in the world. From the release:The expanded company will be geographically diversified, with leading positions in the world's top five markets - China, U.S., Russia, Brazil and Germany - and balanced exposure to developed and developing markets. A combination of Anheuser-Busch and InBev will result in significant growth opportunities from leveraging the companies' combined brand portfolio, including the global flagship Budweiser brand and international market leaders such as Stella Artois and Beck's, maximizing the combination's unparalleled global distribution network and applying best practices across the new organization. Budweiser and Bud Light are the largest selling beers in the world, and the combined company will have an unmatched portfolio of imports, local premiums and local core brands. The deal obviously has implications for the U.S. beer business as well. The U.S. will represent 40 percent of the new company's revenues, so obviously it will be a major focus. And observers expect competition to intensify, not slacken, between A-B InBev and rivals including MillerCoors. That said, some observers think the creation of A-B InBev may give some openings for MillerCoors, if it can take advantage of them. From a report from Credit Suisse titled "A New King":In the U.S., the Miller-Coors JV may now benefit from forthcoming disruptions to A-B as its management ranks get a dose of a new cost culture that was inevitable. The JV may also benefit from suspicion which will naturally grip the A-B distributor network. Going into this deal, InBev indicated to us its need to adopt a better b