Lessons from InBev's acquisition of Anheuser-Busch
The tactics and objectives of unsolicited offers in the 1970s and 1980s justifiably evoked images of raiders and pirates. yet while these terms continue to be used – hostile bidder, bear hugs, poison pills and white knights – today’s strategic buyers have little in common with the greenmailers and corporate bust-up artists of that era. Today, such buyers view unsolicited bids as just another tool in their chest to achieve strategic objectives.
InBev was not alone among multinational strategic buyers in making unsolicited bids in 2008. Microsoft, United Technologies, Samsung, BHP Billiton and Electronic Arts, a veritable “who’s who” of multinational companies, were just a few that did so in the last year. Other blue-chip companies, including GE and IBM, have also pursued unsolicited offers as part of their M&A repertoire.
In the months and years to come there will likely be a steady stream of such proposals. The continuing trend towards global consolidation, the current level of economic uncertainty and the recent precipitous drop in share prices come at a time when seller price expectations remain high and unsolicited bids are becoming increasingly respectable.
When undertaking any significant acquisition, solicited or unsolicited, planning is essential because once an announcement is made the deal team is at full stretch. No detail is too small and every contingency must be given a thorough 360 degree review well before the news is made public. While each situation will have its own dynamics, the lessons from InBev’s successful bid for Anheuser-Busch can be broadly applied by others considering a similar approach.
Lesson One – Define Success An unsolicited acquisition that prevails at any cost may earn advisors a fee, but is unlikely to achieve all of the buyer’s key objectives. While the ultimate purpose of any acquisition is for the bidder to acquire the target company, the bidder will always have more nuanced objectives. From the outset, the InBev team was clear that it wanted its bid executed in such a way that the acquisition of Anheuser-Busch would proceed as quickly as possible, with a minimum of hostility and with financial discipline. This meant that while we had to move quickly, we would not vilify the other side or simply prevail by paying more than fair value. With these considerations in mind, the deal team developed an in depth plan that would set out to achieve all of InBev’s objectives.