ABInBev: not here for the beer

In Uncategorized on October 12, 2016 by kmflett


The merger/takeover of SABMiller by ABInBev completed this week after 13 months and the new Company started trading on Tuesday.

That of course is only the beginning of a process of making the merger actually work.

What does that mean?

I expect in due course that the PR and marketing departments of ABInBev will produce statements about what a great thing this largest ever UK takeover (SAB Miller was quoted on the London Stock Exchange) will be for beer drinkers.

The realities of course are quite different.

What the deal is really about is driving shareholder value and making profit for ABInBev.

An article in the Financial Times on 10th October highlighted the realities which will be by no means unfamiliar to those, like myself, who are familiar with the way large global companies operate and indeed must operate if they are to succeed in the current system.

The new Company according to the FT will see one in every four beers across the world and make 45% of the beer industry’s profits.

Analysts- in this case a small group of mostly men in suits who make their living out of knowing something about the beer and probably wider leisure industries- are reported as suggesting that integrating the new Company is ‘likely to be challenging’.

ABInBev’s record in previous takeovers is to achieve ‘large-scale cost savings’. That means job cuts- 5,500 are planned and making the remaining workers work hard (or more productively in management speak).

A priority for ABInBev is to slash the debt it now has of $100bn which according to the FT is 4.5 times its ebitda (a standard measure of Company earnings).

The scale of the managerial task ABInBev faces is revealed by the fact that while the merged company operates in 70 countries previously AB operated in 29.

An analyst is reported as noting that ‘ABInBev fashions itself as a real life school for the development of world-class business managers: executives who can step into any situation, anywhere in the world and drive results’.

Should you ever meet one of these individuals, and I have, do count the number of fingers you have afterwards.

The real target for growth is the African market which grew by 3% last year (we’re talking beer sales here in case you’re wondering).

Perhaps its just as well its not the Sub-Continent since the same issue of the FT reports a growing temperance movement in some Indian States amongst ambitious politicians anxious to address to issues of poverty and drink. That’s not really the way to solve the problem but its understandable that its occurring, unless you’re ABInBev one suspects



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