This Bud’s for Sale

How the Busch clan lost control of an iconic American beer company.

Written By Patrick Cooke for The Wall Street Journal

If ever an American company represented the land of milk and honey for corporate executives it was Anheuser-Busch, though perhaps the land of hops, rice and barley would be more apt. For decades a palace of well-paid vice presidents in cushy offices presided over the manufacture of Budweiser, America’s beer, in that most American of cities, St. Louis. They also oversaw the Busch Gardens theme parks in Virginia and in Florida, where Shamu the killer whale was on the payroll, along with a stable of 250 Clydesdale horses. It was a first-class operation all the way. There were $1,000 dinners, hunting lodges, sky suites at Busch Stadium and a fleet of Dassault Falcon corporate jets with a staff of 20 waiting pilots. Every kitchenette refrigerator at corporate headquarters was well stocked with Bud, Bud Lite and Michelob.

And why shouldn’t the execs live well? The massive, 150-year-old company had an estimated value of $40 billion to $50 billion. Budweiser was, and is, one of the most recognized brands in the world, ahead of McDonald’s, Disney and Apple. “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 strenuously 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 brewing giant InBev, an outfit 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 financial collapse.

To help us grasp the significance of mating this corporate odd couple, Ms. MacIntosh spends roughly the first third of “Dethroning the King” introducing the reader to the Busch clan, a family so beechwood aged in their own history that newborn male Busch babies are anointed with five drops of Budweiser on their lips after delivery.

Presiding over the company is August Busch III, or The Third, as he is called, a control freak so frosty that he tosses his own father (metaphorically) under the Clydesdale wagon in 1975 to gain the company reins. Ms. MacIntosh writes that The Third made his move “not in a heart-to-heart with his dad at the dinner table . . . but through a dramatic and painstakingly choreographed boardroom coup.”

For the next 27 years as chief executive, The Third literally descends upon corporate headquarters each morning piloting his own helicopter and strides the hallways in his trademark cowboy boots. Many of his employees adore him; even his enemies concede that he has a brilliant head for the beer business. When executives are called on by the CEO in meetings to speak, one of Ms. MacIntosh’s sources tells her, their concern “is that he knows more than they do, even though the topic is in their area of expertise.” Another remembers: “He had only two moods: pissed off and suspicious.”

The Third also regarded trusting other people a character flaw, including his own son August IV, or The Fourth, to whom he grudgingly passed on the title after The Fourth had completed an apprenticeship in many of the company’s departments. Ms. MacIntosh portrays The Fourth as a former good-time Charlie indulging in booze, babes and fast cars before pulling himself together to claim his royal birthright. One executive tells the author that, taken together, the father and son were known around headquarters as “Crazy and Lazy.”

There seems little the son can do to please his father. When The Fourth excitedly shows dad previews of the brilliant Super Bowl commercial in which three frogs croak out Bud-wei-ser one syllable at a time, The Third asks why it doesn’t include the traditional “pour shot.” “He just didn’t understand why it was funny,” says one staffer. Ms. MacIntosh does a fine job of exploring the father-son dynamic, but after a while it becomes hard to watch junior get whacked one more time. “They didn’t communicate much,” recalls one executive, “unless you call communicating on a daily basis getting your ass chewed.”

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 endless end-gaming by the two companies. Ms. MacIntosh relates every gambit in crisp, scene-by-scene detail.

Suffice it to say here that the fate of Anheuser-Busch is what results when a company coasts on its reputation and ignores global markets. Despite its reputation as an all-American business idol, A-B proved to be a comparative mom-and-pop operation on the world stage. “Unlike most consumer goods giants, Anheuser-Busch didn’t employ a raft of worldly, well traveled staffers,” Ms. MacIntosh writes. Adds another executive: “I bet 90 percent of the employees came from south of Highway 40, out 270 and to the river.”

The Anheuser-Busch board of directors saw a final chance to forestall takeover by initiating its own merger with the Mexican brewer Grupo Modelo, but in the end—and with the machinations of The Third, who cut off his CEO son at the knees one last time—they lost the will to fight on. After squeezing every dollar out of the Brazilians, and while company layoffs were being planned and the NYSE ticker symbol “BUD” flickered away, the board and its bankers, lawyers, vice presidents and hangers-on began calculating their personal cuts of the sale. One executive complained to the author that he couldn’t help feeling the “victim of America’s cutthroat and . . . fractured business climate.” Victim? The guy walked off with $20.6 million.
Author! Author!

Mr. Cooke is a writer in Pelham, N.Y.

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