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UPDATE: Teamsters/Anheuser Busch Contract Negotiations Statement

August 22, 2008: (Washington, D.C.) – Company and Union representatives met in Cincinnati the week of August 18, 2008, to participate in negotiations on individual brewery local non-economic issues. The meetings were professional and productive and the parties made significant progress resulting in the resolution of all local issues at each of the 12 breweries.

The parties will meet again the week of September 29, 2008 to begin negotiations on national issues.

Gary Rutledge, Vice President, Legal and Government Affairs, Anheuser-Busch Companies and Jack Cipriani, Director, Brewery and Soft Drink Workers Conference, International Brotherhood of Teamsters

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Previous Updates

UPDATE: Anheuser-Busch Agrees to InBev Takeover

On July 14, the board of Anheuser-Busch announced that it has voted to accept a $52 billion takeover bid from Belgian brewing giant InBev. The agreement came on the heels of InBev increasing its offer for Anheuser from $65 to $70 a share. Spurring the deal, according to the New York Times, were signs that influential A-B shareholders—including tycoon Warren Buffett—were favoring the InBev purchase. The new company created by the takeover will be called Anheuser-Busch InBev, the two companies said.

The purchase, which still needs shareholders’ approval, would upend the world’s beer market, making the new entity the world’s largest brewer, easily outstripping current leader SABMiller in market share and size. The new company will control about 25 percent of the world beer market, including half of the U.S. beer market and one-fifth of the beer market in China and Russia.

The Teamsters Union, which represents more than 7,000 A-B employees, said pressing questions remain about InBev’s ability to keep pledges it has made about the future of A-B. InBev has promised that it will not close any of A-B’s 12 U.S. breweries and will not make significant job cuts—instead saying it will generate cash to help finance the purchase from better supply chain management and selling off “non-core” assets (industry analysts and media reports suggest A-B theme parks). But industry experts question InBev’s power to keep these promises and still reap the cost-savings to service the $1 billion-a-year debt the purchase will entail. Experts also point to InBev’s history in Europe and Canada of takeovers followed by attempted brewery closures and layoffs.

“We applaud InBev’s pledge not to close breweries and to keep job losses at a minimum. However, InBev’s history and the debt involved in this sale raise the issue of whether InBev can come through on those promises,” said Jack Cipriani, director of the Teamsters Brewery and Soft Drink Workers Conference and Teamsters Vice President. “Our goal going forward is to protect good American jobs and the communities that depend on those jobs.”

Cipriani said that the Teamsters have requested an immediate meeting with InBev executives to discuss the future of Anheuser and its workforce. He said that in the coming weeks the Teamsters also plan to convene a meeting of union representatives from InBev’s breweries worldwide to coordinate strategy.

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InBev, Anheuser Close To “Friendly Deal”

The New York Times and the Wall Street Journal reported on July 11 that Anheuser-Busch and Belgian brewer InBev are now nearing a “friendly” deal for InBev’s purchase of Anheuser, although neither company has affirmed that the reports are true. The development comes on the heels of InBev increasing its offer for Anheuser from $65 to $70 a share, upping the total purchase price for the company to $50 billion. Spurring the deal, according to the Times, were indications that influential A-B shareholders—including tycoon Warren Buffett—were favoring the InBev purchase.

If it goes through, the deal will upend the world’s beer market, making the new A-B/InBev entity the world’s largest brewer, easily outstripping current leader SABMiller in market share and size. While shareholders will see a healthy profit (with A-B stock already rising on the news), employees, retirees, and the communities that depend on Anheuser-Busch face questions about the future of the company.

No Closures, No Layoffs? Some Question InBev’s Claims

“We applaud InBev’s pledge not to close breweries or lay off employees, but the structure of this sale raises pressing financial questions about InBev’s ability to keep those promises,” said Jack Cipriani, director of the Teamsters Soft Drink and Brewery Division, which represents more than 7,000 employees of Anheuser-Busch companies. According to a Reuters report on June 20, InBev pledged that it would not close breweries in the United States, that staff reductions would be made through attrition, and that it will keep Anheuser’s name as part of the combined company’s new name.

Cipriani has requested an immediate meeting with InBev executives over core financial issues, including how InBev will generate the cost savings to service the more-than-$1 billion a year in ongoing debt that the deal entails.

“InBev claims that economies of scale and other savings from merging the two companies’ operations will generate the money it needs to service this huge debt, but they haven’t said where those savings would come from,” Cipriani said. “We need concrete answers to these hard questions if we’re going to believe InBev’s promise that it won’t cut jobs or close breweries.”

Teamsters Say They’ll Hold InBev Accountable

The Teamsters Union says it will be vigilant and active in representing its members and retirees under a new InBev management. “We’ve talked with unions abroad and in Canada, where InBev’s first moves were brewery closures and attempted layoffs,” said Cipriani. “InBev has yet to show it can respect and value workers once it takes over a company. The Teamsters will hold InBev to its promises not to lay off A-B employees and not to close breweries.”

Cipriani said he is also concerned about the fate of communities that rely on Aneheuser for jobs and corporate citizenship, such as St. Louis. InBev has faced intense hostility to its takeover in St. Louis, Anheuser’s headquarters city, where A-B employs about 6,000 people and gave about $13 million to local charities last year—and where 55,000 people signed a petition opposing the takeover.

In an open letter to the city in the St. Louis Post-Dispatch, InBev chief executive Carlos Brito asserted that InBev will keep St. Louis as its North American headquarters (and even keep the Clydesdale horses, Anheuser’s famous symbol).

“Almost no one believes him,” said one Chicago Tribune writer in response. The comment reflects the company’s well-known history of cost-slashing and brewery closings in its takeovers in Europe and Canada.

Cipriani said, “Under the new management, the Teamsters will stand in support of every American town or city that depends on Anheuser-Busch. We want to make sure InBev realizes its responsibility to the communities that built A-B, including generations of Teamsters.”

Cuts in Ad Budgets Could Hurt Bud Brands

Industry experts at JPMorgan, one of the financial institutions financing the transaction, have suggested the InBev will have to reduce administrative costs or cut Anheuser’s ad budget to meet its earnings targets. “Anheuser’s ads and their classic American image is what makes so many Americans reach for a Bud when they want a beer,” said Cipriani. “In a time when Miller and Coors have launched a joint venture, ceding market share by pulling back on advertising could be damaging for Budweiser brands.”

Sale Would Come After Months-Long Battle

The news that the two brewing giants are in amicable talks comes after weeks of conflict, including lawsuits that were filed on the same day: InBev went to chancery court in Delaware to try to oust Anheuser’s board, and Anheuser filed suit in federal court, claiming that InBev was making misleading statements to shareholders about the solidity of its financing for the deal. But the increased share price and shareholder pressure seem to have brought the parties back to the table.

What’s Next For Anheuser?

Industry experts speculate about the ability of Anheuser-Busch—an American beer-brewing icon for 156 years—to hold on to customer loyalty once the Budweiser family of beers becomes foreign-owned.

“American beer-drinkers value Anheuser’s made-in-the U.S., hometown roots. They know the contributions that Anheuser has made to American communities. InBev will need to earn the loyalty and goodwill of American consumers and American workers. We hope that will happen, and we urge an immediate meeting as a first step in that process,” said Cipriani.

Teamsters Hold InBev to Promises

During a conference call with analysts on June 12, InBev claimed that they would maintain all of the A-B breweries, expected no significant job losses and expected little or no impact on union jobs. We intend to test those promises.

InBev has now offered $46 billion for Anheuser-Busch, after months of speculation. InBev’s possible plan to buy out Anheuser-Busch was first reported in a Financial Times blog on May 23. InBev’s June 11 offer comes to about $65 per share. InBev was reportedly seeking financing from a group of U.S. and European investment banks. If an InBev takeover goes through, the merged companies would control approximately 25% of the world beer market.

A Buyout of Anheuser-Busch? What You Need to Know

International brewing giant InBev made a $46 billion offer for Anheuser-Busch on June 11. Shareholders, A-B employees, retirees, and the communities they live and work in all have a big stake in the outcome of this transaction. It is BudWatch’s first priority to protect those who have committed a good portion of their lives to making Budweiser the King of Beers. Therefore, our analyses and information come from independent and outside sources, not A-B, InBev or any other potential buyers. We also want to safeguard the unique legacy of Anheuser-Busch, a proud company and American icon, built by generations of Teamster workers.

This website seeks to pass on valuable information and insights as this situation changes rapidly. Likewise, we need your help. Please complete the online form so that we can gather information that can be reported back, to help you make fully informed decisions about your future.

InBev’s Possible Buyout: Answers to Frequently Asked Questions

What is InBev’s new offer for Anheuser-Busch?

InBev has now offered $46 billion for Anheuser-Busch, after months of speculation. InBev’s possible plan to buy out Anheuser-Busch was first reported in a Financial Times blog on May 23. , InBev’s June 11 offer comes to about $65 per share. InBev was reportedly seeking financing from a group of U.S. and European investment banks. , If an InBev takeover goes through, the merged companies would control approximately 25% of the world beer market.

If InBev is offering such an excellent price for my stock, doesn’t everybody win?

Shareholders might experience solid returns from their shares initially if the takeover goes through at $65 a share. But there are tradeoffs. InBev’s buyout record in Europe and Canada shows that workers and communities that depend on Anheuser-Busch could suffer from a possible erosion of working conditions and even layoffs. And, while InBev’s plans for Anheuser-Busch aren’t clear, the general consensus on Wall Street is that InBev is offering an exorbitantly high price for Anheuser-Busch, and would then be under heavy pressure to service its debt by selling assets and slashing costs.

Would InBev cut jobs or employee benefits at A-B?

To recoup the huge purchase price, experts say that InBev may have to cut Anheuser-Busch’s operations to the bone. If the pattern InBev management has followed overseas is any clue, labor costs will likely be one of the first places it will seek to make cuts. That could mean layoffs, wage cuts, higher worker health care costs, poorer health benefits, or decreases in future pensions.

One analyst told Market/Watch, “InBev is run by a bunch of machete-wielding investment bankers who go around and cut costs wherever they can.” Such an approach, Gilpin speculated, could leave the new owners with what the analyst described as a “demoralized work force and tarnished brands.”

Will Anheuser-Busch retirees be protected in an InBev takeover?

It’s difficult to say. One concern is A-B workers’ current retiree health care protections, worth thousands per year for retirees on fixed incomes. If InBev needs to service a $50 billion in loans, retiree health care could be a cost-cutting target. Any profits worker-shareholders make in the takeover could be dwarfed by losing important benefits such as retiree health care.

Could InBev break up Anheuser-Busch and sell it off?

Another option for InBev to pay back its loans after buying Anheuser-Busch would be to sell off some parts of the company. Some banking experts say if InBev pays top-dollar for Anheuser-Busch, it would be left with few other choices. “There must be a break-up of the company” in such a case, one banker said.

Wouldn’t a buyout be good for Anheuser-Busch?

Consumers and the American public see Budweiser as the last of the great American beers. The Wall Street Journal calls Anheuser-Busch “a potent symbol of Americana.” But it’s more than patriotism that gives people pause about the InBev buyout. Workers don’t always fare well when outside conglomerates buy breweries. Since South Africa Breweries (SAB) took over Miller Brewing’s U.S. operations, it demanded hikes in workers’ health care costs, elimination of overtime after 8 hours, elimination of seniority rules and drastic cuts in staffing levels. At the three Teamster-represented Miller breweries, we successfully fought back those demands during contract negotiations; but those demands were implemented at the non-Teamster breweries. We don’t want that to happen at Anheuser.

Communities that depend on Anheuser-Busch would suffer if InBev makes cost cuts—including St. Louis, where 6,000 people work at Anheuser and A-B contributes millions to the tax base, local businesses, education, and charities like the Red Cross. However, during a conference call with analysts on June 12, InBev claimed that they would maintain all of the A-B breweries, expected no significant job losses, and expected little or no impact on union jobs. Retiree benefits and issue were not addressed on that conference call.

Aren’t mergers good for companies in general?

Mergers initially make stock prices rise, but, as a recent New Yorker article put it, “…corporate marriages only rarely end in bliss. A KPMG study of 700 mergers found that only 17 per cent created real value, and that more than half destroyed it.”

Anheuser is likely to resist any takeover bid from InBev. While this may drive prices up temporarily, A-B’s long-term future could be at risk. The Wall Street Journal points out, “If the price went that high, InBev would need to wring steep cost cuts out of Anheuser to make the combination financially viable, possibly slashing expenses by more than $1 billion over a few years. That could mean sharp reductions in Anheuser's marketing budget and large numbers of layoffs, analysts say.”

Where does the Busch family stand on an InBev buyout?

The Busch family founded Anheuser-Busch, and are still key shareholders, executives, and directors of the company. In recent years the family relinquished much of its control over the company, and family members on the board of directors only control 3.5% of common stock. However, the family’s influence on the board is reported to be strong. It appears that CEO August Busch IV would fight any takeover attempt.