Mixing Beer Companies Brews Trouble

The Wall Street Journal did an analysis of the rumored purchase of Anheuser-Busch, by Brazilian/Belgian owned InBev. Some of the analysis dealt with the financial and marketing aspects of the deal, but much of it talked about the Human Resources issues that surround the deal. These include:

• Anheuser is heavily unionized and InBev has been very tough with European unions, facing strikes and protests in Belgium and Newfoundland. In fact in Newfoundland InBev hired a hard-nosed security company to keep the union under control. (Harkens back to the days of the railroads and the Pinkertons.)


• InBev is very harsh on non-performing employees, subjecting them to what as been described as isolated cases of moral harassment.


• InBev has what is called a "high octane" culture, meaning very "rah, rah". Low costs, high incentives. This does not match the much more traditional culture at A-B.


• InBev has a tendency to replace management with Brazlians.

A-B has responded coolly to the interest by InBev and naturally, the unions representing the workers are not happy with the idea at all.

It is well known that many mergers and aquisitions fail, not for financial reasons, but for people reasons. Does this one make financial sense? Absolutely, InBev has an operating margin of 27% while A-B's is 17%. But the people issues maybe difficult to overcome.

Another key to this may be the reaction of the American public. Messing with the clydesdales is downright UN-American. To me it would be like selling the White House. And with the political landscape poised to become the domain of union-friendly Democrats there might be some trouble in Congress and the White House with this one.

But if this occurs this will be one to watch. Will it succeed? Or will it become another Harvard Business School case study of one more M & A sunk do to people reasons?