InBev, Anheuser-Busch battle in Washington

Saturday, June 28, 2008 | 5:51 p.m. CDT; updated 10:04 a.m. CDT, Tuesday, July 22, 2008

WASHINGTON — The chief executive of InBev, a large Belgian brewer, flew directly to Washington and was sitting down with Sen. Claire McCaskill, an outspoken opponent of his company’s proposed takeover of her home state’s Anheuser-Busch, when she offered him a beer.

McCaskill, D-Mo., opened the noontime meeting in her office with Carlos Brito two weeks ago by pointedly offering him and his two aides a choice of three Anheuser-Busch drinks. He chose Bud Light, as did the senator. “To Anheuser-Busch!” McCaskill toasted, and they clinked bottles.

The companies in profile

InBev Headquarters: Leuven, Belgium Employees: Almost 89,000 worldwide 2007 net sales: $21.2 billion Key products: Beck’s, Stella Artois, Bass Anheuser-Busch Headquarters: St. Louis Employees: More than 30,000 worldwide 2007 net sales: $16.7 billion. Key products: Budweiser, Bud Light. SOURCES: Company annual reports

Then she lit into him. “You really need to spend a lot of time working to win the hearts and minds of Missourians,” McCaskill told the executive, according a person in the meeting who spoke on condition of anonymity. “And I’ll be honest with you: I don’t know how you’ll do it.”

InBev’s unsolicited bid for the St. Louis company earlier this month has sparked a struggle over one of the country’s most iconic brands. In Washington, each side is in search of influential allies to help sway public opinion — a factor potentially important in a proxy fight — and enlist the aid of lawmakers, or at least blunt the opposition.

If federal officials turn against InBev, they can complicate or even move to stop the merger on antitrust grounds. Sen. Christopher Bond, R-Mo., has already written to the Department of Justice and the Federal Trade Commission, asking them to examine the merger for possible ill effects on American consumers.

After InBev’s $65-a-share offer, Anheuser-Busch’s management and board initially remained silent as they studied the proposal.

But late Thursday, the board announced that it had unanimously rejected the offer as inadequate, and in Washington, the phones of lawmakers from Missouri — and several other states — started ringing with calls from Anheuser-Busch’s D.C. office. Lobbyists for the King of Beers wanted to let them know right away that the company had rejected the $46 billion offer.

Thus the battle over America’s most popular brew, Budweiser, was joined in Washington.

InBev, the maker of Stella Artois, Beck’s and Bass, so far has been the more aggressive of the two companies. Over two days in mid-June, Brito, accompanied by newly hired lobbyists, held a series of meetings with five members of the Missouri congressional delegation, as well as James Clyburn, S.C., the third-ranking Democrat in the House. The welcome ranged from cool to outright hostile.

Meeting with Bond, Brito asserted that he intended to keep Anheuser-Busch’s headquarters in St. Louis, its breweries open and its jobs intact.

Bond was skeptical. “I’m sorry. I’m from the Show-Me State,” he said. “You’ll have to show me.”

Brito, a natty Brazilian educated at Stanford University, argued that he intended to make Budweiser as important and popular a brand around the world as Coke or Pepsi. That would only improve Anheuser-Busch’s prospects, including in its home city.

Bond was harshly direct: “My Missouri constituents say, ‘This Bud’s not for you.’ ‘’

At another Capitol Hill session, St. Louis congressman Todd Akin, R, cautioned Brito that Anheuser-Busch played a unique role in its home city. “I said, It’s not just a corporate citizen in the St. Louis community; it’s an institution,” Akin said. “Anything that would disrupt that relationship would be viewed as unacceptable.”

Anheuser-Busch has also played a significant role in Washington. The company has for decades boasted one of the capital’s most active lobbying offices and has kept on retainer about a dozen outside lobbying firms. Among these are Gephardt Group, led by the former longtime St. Louis congressman and Democratic House leader Dick Gephardt; Public Strategies Washington, which includes former White House press secretary Michael McCurry; Timmons & Co., the city’s oldest lobbying firm; and Akin Gump Strauss Hauer & Feld, D.C.’s second-largest lobbying law firm.

Anheuser-Busch’s political action committee is one of Washington’s larger pools of money available for donation to candidates.

Although InBev has grown through acquisitions into one of the world’s biggest beer producers, it is much newer to Washington. In recent weeks, it hired four of the capital’s highest-profile lobbying and public relations firms to assist with its takeover attempt. These include the new lobbying firm set up by former Sens. Trent Lott, R-Miss., and John Breaux, D-La.; Glover Park Group, which includes former White House press secretary Joe Lockhart; and the lobbying firm Johnson, Madigan, Peck, Boland & Stewart, which arranged Brito’s visits on Capitol Hill.

In addition, InBev’s team includes Mercury Public Affairs, which is contacting local politicians around the country to explain why the company wants to take over Anheuser-Bush. The entire effort is being coordinated by the Brunswick Group, a large communications firm.

“We understand that Anheuser-Busch is an American icon,” said Steven Lipin of the Brunswick Group. “InBev is committed to fully explaining its strategy for growth and its preservation of the Anheuser-Busch heritage to all stakeholders involved in the potential combination, and the meetings in Washington were part of that process.”

Anheuser-Busch is pressing the case that it can improve its worth to shareholders without being sold and that InBev’s offer is too low. Anheuser-Busch said Friday that it planned to cut as much as $1 billion in annual costs, in part by offering early retirement packages to as many as 1,290 workers, and that it would increase its planned buyback of shares to bolster its stock price.

“We are focused on educating lawmakers on the reasons supporting the board’s decision,” said Gary Rutledge, vice president for legal and government affairs at Anheuser-Busch. “Anheuser-Busch has for many years maintained a significant presence in Washington, D.C., and in state capitals throughout the country, and we are well-prepared to effectively represent the interests of the company and its shareholders on this issue.”

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