AB-InBev’s new management board raises eyebrows

Oh ye innocents. What do you think a takeover by a foreign company means? It means you end up being run by foreigners. So why the feigned surprise over AB-InBev’s new executive management board? Just because it does not have one single SABMiller veteran on the list?

While AB-InBev has taken on SABMiller’s Mauricio Leyva, who joined the brewer in 2005 and rose to become Managing Director of the South African unit, he is not considered a “veteran” like Mark Bowman who was first hired in 1993.

The exclusion of Mark Bowman, SABMiller’s top man in Africa, allegedly shocked the analysts. He will only stay on for half a year to facilitate a smooth transition. Given the continent’s importance to the deal, the departure of Mr Bowman seemed unexpected. One analyst argued that it was difficult to speculate on the reasons from the outside. But should Mr Bowman have aspirations to become CEO of another company, maybe AB-InBev was not the right place.

Revealing its new top management on 4 August 2016, AB-InBev’s message was loud and clear: By giving the majority of seats to Brazilians and other Latin Americans, AB-InBev not only underlined a strong home bias to Brazil, where its strategy is hatched; it also emphasised that its centralised cost-cutting management style will dominate the post-merger integration process. As part of that process AB-InBev’s CEO Carlos Brito has undertaken to extract USD 1.4 billion in annual cost savings by 2020.

In one respect at least, AB-InBev did not break with SABMiller practice of having a political fixer on its board. It appointed Jabu Mabuza, who chairs the board of Telkom South Africa, as chairperson of the brewer’s Africa Board along with Mr Brito.

In a statement outlining its proposed structure after the merger with SABMiller, expected to complete on 10 October 2016, AB-InBev said Africa would be “a critical driver of growth for the combined company”. The company added it intended “to build on the strong heritage of SABMiller in the region”.

The South Africans may have been mollified by the announcement. This was not the case in the UK. “British staff betrayed in yet another foreign deal” screamed the Daily Mail newspaper in a headline on 4 August 2016. Up to 576 SABMiller jobs in the UK could go, according to AB-InBev’s plan. The newspaper went on to discuss the “disgusting U-turn” AB-InBev had made on a pledge to save British jobs. Now all the back-office jobs that were done out of Woking (just outside London) will be moved to Belgium, where AB-InBev has its global headquarters. The Daily Mail also reminded its readers that the U-turn was reminiscent of the takeover of Cadbury by the US company Kraft.

“Just days after this deal was completed in 2010, Kraft announced Cadbury’s UK factory in Keynsham, near Bristol, would shut despite previous promises to keep it open.”

Pointing to the injustice of it all, the article mentioned further that SABMiller’s CEO Alan Clark, 57, will walk away from the deal with GBP 70 million in his pockets.