Further, cost synergies of $1.5 billion annually are expected to accrue (Anheuser-Busch, 2008).
These claims are reasonable. There is little geographical overlap between the different brands. In particular in China, A-B is strong in the northeast, while InBev is strong in the southeast. The two companies are also complementary, with A-B strong in North America and InBev strong in Europe and South America. The experience of InBev in its previous major move in North America (the acquisition of Labatt's in Canada) was that it was able to build market share for InBev global brands by using the existing Canadian distribution system. Therefore, their expectation of replicating this success in the U.S. is reasonable. The claim of cost synergies is, however, questionable. While InBev claims a strong track record of cost synergies, previous M&A activity was largely in takeovers. A merger of equals leaves the company with two systems operating worldwide. There are no plans to rationalize capacity in North America. Cost savings in the $1.5 billion range, therefore, are unlikely to occur simply through corporate function rationalization in China and Toronto.
One of the most significant benefits of the merger is that it defends against the rapid growth of other major brewers in the world. As the industry matures, consolidation is rampant. Both InBev and A-B were threatened by the emergence of massive conglomerates such as MolsonCoors and SABMiller. The A-B InBev merger wards off any potential...
market. Prices are low as a result of intense competition. Industry players are more oriented to trying to increase prices, since cutting prices further would damage the bottom line. The emergence of premium InBev brands in the U.S. would increase average beer prices, rather than decrease them. Further, the impacts of rationalization are unlikely to yield significant cost savings in North America, which means that the combined entity is unlikely to pursue lower prices, but will rather attempt to win market share through growth in the premium segment instead.
Works Cited:
No author. (2009). InBev completes Budweiser merger. BBC. Retrieved November 27, 2009 from http://news.bbc.co.uk/2/hi/7735953.stm
No author. (2007). 2007 NAICS definition. NAICS. Retrieved November 27, 2009 from http://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=312120&search=2007%20NAICS%20Search
Press Release. (2008). InBev and Anheuser Busch agree to combine. Anheuser-Busch. Retrieved November 27, 2009 from http://www.anheuser-busch.com/Press/PressImages/FINAL%20PRESS%20RELEASE.pdf
No author. (2009). Mergers and acquisitions: Definition. Investopedia. Retrieved November 27, 2009 from http://www.investopedia.com/university/mergers/mergers1.asp
The leadership personnel of the companies were far more affected by this merger, and there is no evidence that this merger was viewed as anything but a positive move for both companies by these individuals (Coffee 2006; Taft & Musich 2006; Knorr 2006). The cash premium that was paid to Mercury Interactive shareholders and the ongoing increase in price for Hewlett Packard stock following the merger makes it likely
Mergers and Acquisitions: The Case of Microsoft and EPAM This paper focuses on Microsoft Corporation. The firm is one of the major public multinational corporations in America with headquarters in Redmond, USA. The company majors in developing, manufacturing, licensing, and supporting a broad scope of services and products that are especially predominant in the computing of various product divisions. The firm was established in 1975 with the goal of developing and
American Airlines/U.S. Airways merger issues In January 2012 U.S. Airways Group, the parent company of U.S. airways, expressed interest in acquiring AMR Corporation, American Airlines parent company. This merger would add 1.5 billion dollars in revenue reduce competition in various cities and create one of the largest airlines in aviation history. For shareholders and workers this is a great thing. Some of the benefits are more destinations, more flights and the
The deal was immediately criticized as anti-competitive by William Kennard, the chairman of the Federal Communications Commission, and by the Communications Workers of America, which represents some workers at both of the merged companies. But neither government regulators nor union bureaucrats will have the slightest impact on the latest merger. They have neither the power nor the desire to oppose the plans of the giant telecommunications monopolies. More substantial opposition
Jerry Lopatin is the senior vice president, engineering at Quantum, having joined the company in March 2008. He served in a similar capacity at ONStor, and previously worked at companies such as Iomega, Samsung Electronics, IBM. III Opportunities/Threats According to Quantum's Web site (2008), it is in a very favorable position in terms of opportunities. By nature, the it world is developing with increasing rapidity, with computers and software developing almost more
The first three organizations in line to recuperate their funds were Citigroup, J.P. Morgan and General Electric Group. They had been offering financial solutions and encouragement to purchase the WorldCom stock based on a favorable business relationship. However, at the time when bankruptcy procedures were commenced, the three organizations recognized their losses and intended to recuperate them. A succinct presentation of the period surrounding the crisis could be reveled by