The Incredible Secret Story Of The Big Fish That Got Away... Anheuser-Busch

Submitted by SadInAmerica on Wed, 07/16/2008 - 8:06pm.

This week, anxious Anheuser-Busch employees have been doing a little Monday morning quarterbacking over what the St. Louis brewer could have done differently over the years that could have prevented Sunday's decision to sell itself to Belgium's InBev.

Perhaps, some close to A-B have speculated, the company could have avoided this fate if it had months ago persuaded its Mexican partner, Grupo Modelo, to sell a controlling stake to America's King of Beers. (A-B bought an 18% stake in Modelo in 1993 and raised that to a 50.2% noncontrolling stake in the late '90s).

But the Corona Extra brewer had always been hesitant about relinquishing its own treasured independence to A-B. And, while a deal was in the works as of last week, it wasn't clear that all the Modelo family owners were firmly on board, says a person familiar with the matter.

And things might have moved faster, with a deal reached even years ago, industry insiders say, had it not been for the cultural schism between A-B and Modelo that, while less prominent in recent years, has long colored relations.

The schism dates to the early 1990s and has to do not just with beer, but a fish. Yes, a fish. A very big fish, in fact.

When A-B was negotiating to buy a minority stake in Modelo, an A-B consultant, speaking metaphorically, told the brewer's then CEO, August Busch III, that he needed to "go hunting and fishing" with Modelo executives to win their trust.

An outdoorsman, Busch III took a literal approach. He invited Modelo executives to join his team for a weekend of sport fishing off the shores of Cabo San Lucas, where he had enjoyed his honeymoon. Modelo insisted on paying for the trip because it was in Mexican waters.

Under a bright blue sky early one morning, several boats fanned out in the Pacific. Busch III hooked a huge marlin, says a person who was on the excursion. As Busch III fought the massive fish, he was told he had a phone call-important business back in the U.S. Instead of reeling, Busch III took the call. He handed the rod to a bewildered Valentin Diez, a senior Modelo executive and major shareholder.

Busch III soon decided he needed to be back in the U.S. that night. The fishing, planned for two or three days, would have to end the first day. Busch III paced and stared at his watch. When told it could take up to four hours to land the marlin, he said that was too long, say people who were on the trip. Busch III said he needed to get back to shore soon for his flight home, and that the Modelo team needed to move expeditiously to bring in the fish.

"Diez felt awkward," says a person who went on the trip. "He thought, gee, how important is this deal [with Modelo] to August if we are getting rid of a fish and we're going back home and I'm playing second fiddle?"

Diez wasn't able to land the marlin. It disappeared into the sea within about 30 minutes.

Later, Diez remarked that he was angry that Busch III had been so aggressive and domineering when it was Busch III who had invited the Modelo executives on the outing, says the person familiar with Diez's thinking.

"That story explains it all," says another person who went on the trip. "You'll do it my way or you'll die."

Busch III declined to be interviewed for this blog post. Modelo declined to comment.

There was long tension between Busch III and Diez, say people familiar with the matter. Relations between the companies improved in recent years, with Busch III and his son, A-B's current CEO, August Busch IV, enjoying healthy relations with Modelo Chairman Carlos Fernandez. Still, if the two companies had become cozier earlier, perhaps neither Anheuser nor Modelo would find itself dealing now with InBev.

David Kesmodel - July 16, 2008 - source WallStreetJournal

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Submitted by SadInAmerica on Wed, 07/16/2008 - 8:06pm.