Dethroning the King (55 page)

Brito had been to St. Louis before. His first big business trip early in his brewing career had been a visit to Anheuser-Busch, where he learned about how the legendary American giant brewed and distributed beer. The coin had certainly flipped. He was now about to instruct Anheuser's staffers on how he did business at InBev as their new boss.

When Brito sat down in Anheuser's ninth floor boardroom with the strategy committee that day, most of the committee's members were still digesting the fact that they had become obsolete overnight. It was surreal.

“It all happened so quick,” said Tom Santel. “It was only, like, 51 days. We thought it would last a lot longer.”

“I don't think that early on, people really understood whether this thing was going to really happen,” another strategy committee member said. “There was to a certain extent some denial that this was really true. Up until the day that the board agreed to sell, there was a lot of hope—anxious hope—‘We're going to fight these bastards, ' blah, blah, blah.”

In an awkward presentation that elicited a few polite questions, Brito pledged to the strategy committee that InBev and Anheuser would do great things together and take the global beer market to a new level. His comments seemed highly scripted, but they helped convince at least a few staffers that he wasn't the devil incarnate.

During a brewery tour that day led by brewing head Doug Muhleman, a group of workers who manned one of the bottling lines presented Brito with a T-shirt—part of a tradition that particular team had for greeting special guests and VIPs. The contrast between globe-trotting Brito and the bottling line's blue collar workers was highlighted by the fact that Brito walked around that day with his passport in his shirt pocket. Nonetheless, he was friendly and very approachable. “He must have been trying to convey the sense that they weren't monsters, that he was a good guy,” said one former Anheuser executive who had never met Brito before that day. “I remember after that, thinking he was not so bad.”

There was still plenty of anger and frustration to go around in St. Louis. Anheuser's top staffers spent the next few months repeatedly running over what they could have done differently. It was easy to point to the distant past, when most of them hadn't been in control, and to blame things on The Third's arrogance. They had also allowed certain more recent initiatives to be shelved rather than pushing for them aggressively, however, such as the talks with SABMiller or the long but fruitless flirtation with Modelo. Now, InBev was pledging to squeeze $1.5 billion in savings out of Anheuser-Busch within three years, another half as much as the $1 billion target Anheuser had just announced on its own. It was bound to be painful.

The hand-wringing grew worse as employees who wanted to keep their jobs realized they would have to fight for them. Anheuser had already announced plans to reduce its workforce by up to 15 percent on its own, and InBev was likely to slash even more.

It didn't take long for the layoffs to start in earnest. On December 8, 2008, three weeks after the deal was officially completed, InBev said it would cut 1,400 salaried workers in its beer-related divisions, about 6 percent of its U.S. workforce. Seventy-five percent of those cuts hit the St. Louis area. And they came on top of the 1,000 workers who took buyouts or early retirement. Peering out the front windows of Anheuser's headquarters became a painfully demoralizing exercise.

“I'd look out and there was yet another person standing by their car, carrying a box, sobbing uncontrollably,” said Bob Lachky. “And there would be a security guard with them. They'd just run their butt right out the door. To watch it is vividly etched in your memory. It was just awful. And the phone calls and the networking afterward, people just begging for a job. It was not a good time for that. It's gut-wrenching.”

The company's decision to announce the biggest chunk of its layoffs just a few weeks before Christmas sparked a great deal of anger, but the alternative seemed just as bad. “We didn't want to send people away over the holidays with 90 percent of the company afraid for their jobs,” Dave Peacock told the
St. Louis Post-Dispatch
. “I just didn't think it was fair to people to send the whole company away with a lot of people afraid for their future.”

The winter of 2008—just before the start of a year in which America's unemployment rate hit 10 percent—was a horrible time to be laid off in the hard-hit Midwestern United States. And the reverberation of those big initial job cuts stretched on for more than a year. One executive sent out a blast e-mail in early 2010 saying that his job had been discontinued. Some of the company's salespeople were told long after the deal closed that they needed to fire a layer of staffers beneath them. They did so, only to discover that they were being demoted into those newly emptied positions.

As Anheuser's employees realized their jobs were at risk in the immediate aftermath of the merger, their collegial behavior devolved into a fight for survival. “It was like
Apocalypse Now
,” Lachky said. “The further and further up the river you got, the more chaotic it was. People were turning on each other. People were just taking each other out. But in the end, everybody got theirs. We were all going to get it.”

Saying good-bye was slightly less painful for the strategy committee, many of whom drafted lucrative exit packages and left before the end of the year. “I just couldn't wait for everything to be over, because I knew I wasn't staying,” said Tom Santel, who left the company on November 20, right after the merger officially closed.

Santel sat down with his staff the week after the deal was announced to detail what had happened and explain what might be coming down the pike. The loss of Anheuser-Busch was going to feel like a death, he told them, and they'd probably go through similar stages of mourning. “It was like a four-month funeral,” he said. “It was sad, seeing all of the people there and all of the heartbreak.” Santel, who was paid $26.5 million for his stake in the company, didn't get the final word on his dismissal until October. It was obvious well beforehand, though—InBev had no plans to replace his job. “I knew even if they wanted me, I wouldn't want to stay,” he said. “I wouldn't have fit in there.”

InBev asked Lachky, however, to stay on longer so that he could spearhead the merged company's first-ever Super Bowl ad campaign. After some coaxing from Dave Peacock, Lachky decided to take one last crack at the big event. He made sure to get assurances on an exit package of his own, up front and in writing.

“I never felt so lonely as I did doing Super Bowl creative for the last year, because nobody cared. Nobody really wanted to work on it,” he said. “If you were relying on internal people to be motivated to get some Herculean task done, you might as well forget it. Because from that point on, it was all about self-survival and people counting their stock options every day. Everybody quit working mentally, quit putting in the extra hours.”

“It was like anarchy. Mentally, everybody had checked out and they were fighting for themselves. The secretaries were crying in the hallways.”

After a decade-long winning streak, Anheuser-Busch did not win
USA Today
's Ad Meter ranking for the best Super Bowl spot in 2009—even after luring comedian Conan O'Brien into his first-ever TV commercial for one of its spots. Anheuser's crackerjack marketing team finished second and third instead, losing out to two unemployed brothers from Indiana who created a Doritos ad as part of an online contest. “We beat the king of commercials,” 32-year-old Dave Herbert, one of the brothers, proclaimed to
USA Today
. Lachky retired at the end of February, a few weeks after the game aired. He stood to earn $20.6 million.

Out of Anheuser's pool of top talent, only three executives kept their jobs. Peacock, thanks partly to the goodwill he built with InBev during merger negotiations, assumed the highest-profile role of any “old Anheuser” executive. As president of the merged company's U.S. division, he became the new public face of Anheuser-Busch once The Fourth dropped out of sight. The job wasn't particularly enviable, though. His new employer was pressuring workers, vendors, and wholesalers to slash costs, and he was stuck reporting to Brazilian Luiz Fernando Edmond, who had moved to St. Louis and was put in charge of InBev's North American operations. Gary Rutledge stayed on as general counsel for the company's North American business. And Bob Golden, Anheuser's former acquisitions head, eventually moved to New York after being named global head of the merged company's mergers and acquisitions effort. Golden's appointment dredged up at least one bittersweet irony: He was tasked again with trying to buy the remaining stake in Modelo, the same deal he had already brought to within an inch of completion while trying to defend Anheuser-Busch. One analyst predicted in March of 2010 that the two companies would strike a deal valuing Modelo at $10.8 billion, well below the price The Fourth's team had been willing to pay.

The large number of high-level departures left few who were willing to fight on behalf of the old Anheuser-Busch. Brito's qualms about keeping InBev's North American headquarters in St. Louis ended up being misplaced, at least in the executive suite. There wasn't much emotional or institutional baggage to wade through as InBev worked to remake Anheuser-Busch in its image, because nearly everyone who might have caused a problem packed those bags and left.

As one of the terms of the takeover, InBev pledged to put two Anheuser-Busch representatives on its board of directors—August IV and one other current or former Anheuser director. Two years after the deal was struck, it still hadn't made good on its promise. Some industry watchers assume that was because the spot had been set aside for Carlos Fernández in the event that the Brazilians could finally strike a deal with Modelo. Others attributed it to a lack of political will by anyone with ties to the old company.

“It's like they didn't give a shit,” one advisor on the deal said. “Once they sold it, they didn't give a shit.”

Frankly, though, many of Anheuser's former top executives had better things to do. While the deal dealt a crushing blow to their psyches and cut short their careers, it certainly padded their wallets. Those who didn't have stock options didn't get much, but those who did got rich instantly. And many did.

“All of these guys got lots of money,” said an advisor to the company. “We were quite surprised. They had obviously been loading up for years.”

“It almost made you a little uneasy, because it was like ‘Oh my God, the day has come,' ” said one former executive. “It's, like, unbelievable that you could go home with this kind of money.”

Chief Financial Officer Randy Baker, one of The Third's original “eaters,” pulled in $72.3 million upon leaving the company. Lauded by other Anheuser insiders for his even-tempered dependability during the takeover mess, he chose to recede into the shadows “and has kind of gone off to get away from everybody,” one advisor said. “I thought Randy handled himself phenomenally through this whole thing,” said another. “To have lasted and been trusted in that environment for as long as he was was really, really impressive. He did it by not ever taking sides—he was kind of all business.”

Some of the company's former executives, upon winning the corporate equivalent of the lottery, used their new financial freedom to pursue the types of dreams that can only be chased by the rich. Anthony Ponturo, who had been the company's sports marketing head and one of the most prominent marketing executives in America, collected $16.8 million. He launched a New York-based consulting firm and threw a bunch of money into the production of Broadway shows. For a man who used to spend more than half a billion dollars each year promoting beer, financing
Hair
probably seemed like a steal.