Inbev Case Study
EXECUTIVE SUMMARY
The brewing industry has enjoyed high margins and steady growth for decades. The acquisition of Anheuser-Busch (hereafter to be referred as “AB”) by InBev was regarded as an opportunity and a challenge for the executives and shareholders of both companies. Our report would examine the strategic rationale of the merge and qualify and quantify the synergy effects from revenue and cost. Also, we provide suggestions about culture integration for the newly merged firm. Finally, though the premium overweighs the synergy effects, we believe the competitive advantage of combined firm would benefit its shareholder in the long run.
STRATEGIC RATIONALE
The value creation by merger of InBev and Anheuser-Busch fits well the synergy analysis framework.
First, from the Benefit-Cost analysis, the synergy comes from the increase in synergy and saving on overlapped cost. From revenue increase perspective, we can expect InBev and Anheuser-Busch could cross sell each product through each channel. Apart from that, for those regions two companies have cost overlapped, two companies could save manufacturing and distribution cost.
Second, the geographic dispersion helps the merger company become the largest bear company in the world. They diversify business risk and capture the different growth opportunity of both developing countries and developed countries.
Third, the merger company could also benefit from economies of scale. The economies of scale come from manufacturing on cost side and also on decision side which means the company could make global decision. Finally, chances are that the culture of the new co- could incorporate the highlights from both company cultures. However, this can be only the drawback to this merger which leaves chance to culture conflict. For the rest part of the report, we will quantify this effect to calculate the synergy benefit.
SYNERGY EFFECTS
Revenue Synergies
As the two companies have different geographic and product
The brewing industry has enjoyed high margins and steady growth for decades. The acquisition of Anheuser-Busch (hereafter to be referred as “AB”) by InBev was regarded as an opportunity and a challenge for the executives and shareholders of both companies. Our report would examine the strategic rationale of the merge and qualify and quantify the synergy effects from revenue and cost. Also, we provide suggestions about culture integration for the newly merged firm. Finally, though the premium overweighs the synergy effects, we believe the competitive advantage of combined firm would benefit its shareholder in the long run.
STRATEGIC RATIONALE
The value creation by merger of InBev and Anheuser-Busch fits well the synergy analysis framework.
First, from the Benefit-Cost analysis, the synergy comes from the increase in synergy and saving on overlapped cost. From revenue increase perspective, we can expect InBev and Anheuser-Busch could cross sell each product through each channel. Apart from that, for those regions two companies have cost overlapped, two companies could save manufacturing and distribution cost.
Second, the geographic dispersion helps the merger company become the largest bear company in the world. They diversify business risk and capture the different growth opportunity of both developing countries and developed countries.
Third, the merger company could also benefit from economies of scale. The economies of scale come from manufacturing on cost side and also on decision side which means the company could make global decision. Finally, chances are that the culture of the new co- could incorporate the highlights from both company cultures. However, this can be only the drawback to this merger which leaves chance to culture conflict. For the rest part of the report, we will quantify this effect to calculate the synergy benefit.
SYNERGY EFFECTS
Revenue Synergies
As the two companies have different geographic and product