The Interbrew-AMBEV Merger Story
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Case Details:
Case Code : BSTR137
Case Length : 20 Pages
Period : 2002-2004
Organization : Interbrew, AmBev
Pub Date : 2004
Teaching Note :Not Available
Countries : Brazil, Belgium
Industry : Brewery
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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The Announcement Contd...
AmBev's competitors in Brazil expressed concern that the deal would result in a price war that would lead to monopolistic practices by the newly formed company. Commenting on this, Vinicius Camargo Silva, the lawyer for Schimcariol, Brazil's second largest brewer said, "The deal will cause the merged company to either arbitrarily increase profits or use its increased margins from economy of scale or purchasing power advantages to wage a price war. A price war's immediate effect might be good for the consumers but the long term effect would be to force competitors out of a market, and then, once the merged company dominates the market, set a price that the consumer is forced to accept."4
About Interbrew
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Interbrew was founded in the 14th century as Den Hoorn, located on the outskirts of Brussels, Belgium. In 1717, following its acquisition by master brewer Sebastien Artois, Den Hoorn was renamed as Brasseries Artois. By the late 1980s, the company was the second largest brewing house in Belgium. To further consolidate its position in the market, in 1987, Brasseries Artois merged with Belgium's largest brewer, Brasseries Piedboeuf. This resulted in the creation of Interbrew. The two companies owned some key beer brands including Stella, Artois, Leffe, and Juniper. Soon, Interbrew started acquiring specialty breweries in Belgium, like Hoegaarde in 1989 and Belle-Vue in 1990.
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The spate of acquisitions intensified in the 1990s with the company expanding rapidly across the world. It acquired over 30 breweries, of which the most high profile in terms of size included Labatt (Canada), Oriental Breweries (South Korea), Sun Interbrew (Russia and Ukraine), Bass Brewers (UK) Whitbread Beer Company (UK) and Beck & Company (Germany).
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In 2004, Interbrew acquired the Malaysian Lion Group (China) and Apatin Brewery (Serbia). The deal to acquire Germany's Speten Brewery (Gabriel Sedlmayr Spaten-Franziskaner Bräu KGaA) was expected to close in the fourth quarter of 2004. Interbrew's operations were dispersed across five regions - The Americas, Western Europe, Central & Eastern Europe and the Asia/Pacific. Two of the company's premium brands - Stella Artois and Beck's were globally recognized. While Stella had a significant presence in 16 countries, primarily Europe, Beck was marketed in around 120 countries. Interbrew also had two specialty brands - Hoegaarden5 and Leffe -- and several other brands were introduced in Belgium... |
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