Using social media to promote and oppose international mergers: The case of InBev and Anheuser-Busch Owen Kulemeka, PhD Candidate, University of Illinois.

Using social media to promote and oppose international mergers:

The case of InBev and Anheuser-Busch

Owen Kulemeka, PhD Candidate,

University of Illinois at Urbana Champaign

2009 Institute for Public Relations/Grunig Fellow

Introduction

• A study of how social media platforms affect the merger and acquisition process.

•How do supporters and opponents of a merger utilize social media tools to affect the outcome of a merger?

•How are traditional media platforms (e.g. newspapers), alongside social media platforms, utilized in this process?

•The focus was on the US $52 billion merger between brewing giant InBev and Anheuser-Busch

Background

Reasons for the merger:

● By early 2008, Anheuser-Busch was the US largest brewing company.

● However, Anheuser faced several problems:

▪ It had too many employees and managers

▪ It held too much debt

▪ It gave away too many free perks (e.g. free beer, corporate jets, college fees support)

▪ Although traded on the stock market, it was run like a family company by CEO Augustus Busch IV and his father (the Busch’s owned only 4% of the company).

● In June 2008, InBev announced that it was offering $48 billion for Anheuser-Busch

Background

Anheuser’s response to InBev’s offer: No and then Yes

● Anheuser said N0 to InBev: Offer was too low & problems could be solved without merger.

● InBev told shareholders to accept the merger; Argued Busch family was being selfish.

● InBev sued Anheuser to ensure pro-merger shareholder votes would be heard.

● Anheuser counter-sued InBev arguing that the merger effort was illegal.

● In July 2008, Anheuser announced that YES it would merge with InBev for $52 billion.

Background

Opposition to the InBev & Anheuser Busch merger:

After the merger was announced, there was strong opposition from various parties:

● Anheuser employees & unions: opposed merger because it would result in loss of jobs.

● Governor of Missouri state (headquarters of Anheuser): directed his staff to find ways to stop the merger.

● US Senators from Missouri: published letters against the merger.

● Charity organizations: charities that had benefitted from Anheuser generous donations opposed the merger

● Protectionists: Opposed a foreign company buying a US firm.

● Consumers: feared beer tastes would be altered and brand icons changed.

Background

The social media and traditional campaigns for & against the merger:

After the merger was announced, supporters and opponents turned to social media & traditional media to get their voices heard:

Background

The social media and traditional campaigns for & against the merger:

Background

The social media and traditional campaigns for & against the merger:

Background

The social media and traditional campaigns for & against the merger:

Literature Review

Mergers and Crisis Communications

● Communication carried out in pro- or anti-merger campaigns is a form of crisis communication.

● For InBev and Anheuser-Busch, it was crisis communication to prevent a merger failure.

● For opponents, it was crisis communication aimed at preventing a harmful merger.

Literature Review

Mergers and Crisis Communications

Organizational Communication Approach to Crisis Communication:

Crises occur in stages : Signal detection: warning signs identified and avoidance measures taken. Prevention: searching for known risk factors and reducing their harm. Damage containment: attempts to prevent the crisis from reaching unaffected parts. Recovery: emphasis is on returning things to normal as quickly. Lessons learned

Organizations should have crisis management plans anticipating each stage

Criticism of crisis management plans:It is impossible to plan for the numerous crises an organization may facePlans are rarely updatedOrganizations plan for the crisis outlined in the plan but neglect other scenarios may emerge

Literature Review

Mergers and Crisis Communications

Grunig’s excellence theory:

Crisis communication can be carried out in 3 main ways:

Press agentry: exaggerations, lies, and half-truths.

Two-way asymmetry: using research to find better ways of manipulating publics.

Two-way symmetry: being honest. Engaging affected groups in dialogue.Aiming at a resolution in which both the organization and its affected publics win.

Grunig labeled two-way symmetry as ethical and ideal

Literature Review

Mergers and Crisis Communications

Cameron’s contingency theory

● Cameron argued that the excellence theory was too simplistic.

● Effective public relations can’t be limited to only one model.

● Contexts dictate what approach is effective. In some cases, it makes sense to engage in dialogue. In other cases, it does not.

Literature Review

Mergers and Crisis Communications

Grunig’s response:

● I don’t believe that dialogue is effective at all times.

● It is fine to engage in one-way tactics (press agentry, exaggeration)

● However, one-way tactics should only be used when the aim is to promote dialogue. Once everyone agrees to dialogue, propaganda should be stopped.

● Manipulation is only excusable if it is aimed at ensuring that all affected groups have a say.

Literature Review

Mergers and Crisis Communications

Coombs Situational Crisis Communication Theory

● How an organization responds to a crisis should be based on contextual variables.

● Crises fall into three major clusters: Victim cluster: organization has the least responsibility (natural disaster). Accident cluster: moderate responsibility (e.g. accidents, or breakdowns. Preventable cluster: crises where the organization has significant blame

● In a victim situation, organizations should use the deny strategy.

● When facing an accident situation, organizations should use the diminish strategy.

● When facing a preventable situation, an organization should use the rebuild strategy

Research Questions

R1: What themes were prevalent in the crisis communication social media campaigns carried out by InBev/Anheuser-Busch and opponents of the merger?

R2: What themes were prevalent in the crisis communication traditional media campaign carried out by InBev/Anheuser-Busch?

R3: What approaches to crisis communication were utilized in the crisis communication social media campaigns carried out by InBev/Anheuser-Busch and opponents of the merger?

Method

Qualitative content analysis of websites, advertisements, video content, news articles, and social media postings (e.g. blog posts, Facebook posts).

Sources: Lexis Nexis, Factiva, ProQuest, Westlaw, Flickr Advanced Search, Google Image Search, Intelliseek Blog Search, Technorati Blog Search, YouTube, Facebook, Google Blog Search.

Data analysis was conducted using the framework suggested by Miles and Huberman (1994). This framework contains four key steps: data reduction; data display; conclusion drawingverification.

Findings

RQ1: What themes were prevalent in the crisis communication social media campaigns carried out by InBev/Anheuser-Busch and opponents of the merger?

In the social media campaigns by opponents of the merger, 2 themes were prevalent:A.The merger would be financially negative on employees and on US economy/society.B.The merger would be harmful to tradition.

Saveab.com blog:

Massive layoffs, Cuts in benefits for workers, Movement of jobs from our hometowns to foreign capitals (and to New York City!), Losses by the many civic groups and associations that A-B supported

Findings

Keepbudweiseramerican.com blog I am signing this petition in support of keeping Anheuser-Busch of St. Louis, Missouri, an independent American-owned company. This proud and historic American company should not be allowed to fall into the hands of distant foreign owner

Boycotting Anheuser-Busch InBev for screwing St. Louis Facebook page Don't drink AB products because InBev plans to pull St. Louis endorsements and leave the economy in the dumper!

Findings

Official Petition to STOP "InBev" from buying out Anheuser-Busch FacebookAssume only that we all hate InBev and don't plan on putting their fermented urine that they call beer into our stomachs...I am not only certain, but I guarantee and assure you that "InBev" will not only cut costs by changing Budweiser's brewing style

Save Anheuser-Busch from the merger Facebook PageThis would bring an end to one of the most iconic names in American business. Remember all the great commercials, the bud frogs, the horses playin football

Keep Anheuser- Busch American!! Facebook Page

In recent years countless companies and corporations have sold out. While looking for a quick dollar for themselves, corporate executives have decided that their interest in a company was more important than that of the people that use and love their products.

Findings

In the social media campaign by InBev/Anheuser supporting merger, 3 themes were prevalent:A.The offer InBev was making was more than fair. B.The merger would not result in any US brewery closures .C.The merger would not change how it produced its US beers.

theglobalbeerleader.com blog: it is our strong belief that no alternative transaction that you could effectuate would create more value for your shareholders than the $65 per share in cash

There would be no brewery closures (in the United States). ..We understand that St. Louis is integral part of the brand.

Budweiser will be brewed in the same breweries ... by the same people, according to the same recipe,

Findings

RQ2: : What themes were prevalent in the crisis communication traditional media campaign carried out by InBev/Anheuser-Busch?

Faced with opposition, InBev also relied on television interviews, magazines, press releases, and newspaper articles to spread the message. Three themes were prevalent in this campaign:

•InBev’s offer was more than fair considering the bad shape of Anheuser-Busch’s finances•The Busch family’s opposition was not in Anheuser-Busch’s best interest. • The merged company would remain committed to the US

Carlos Brito (InBev ceo) in The Deal Magazine

A merged company would be better positioned to sell InBev brands in the U.S. and take A-B brands global, negotiate better deals with suppliers and distributors, and excel in an increasingly competitive market

Findings

Carlos Brito (InBev ceo) in Forbes Magazine

Our offer provides immediate certainty of value in a weakened stock market environment.

Carlos Brito (InBev ceo) in St. Louis Post newspaper

Headquarters for the North American region of the new company would be in St. Louis. It also would be the decision-making hub for the global flagship brand Budweiser.

The brewery on Pestalozzi Street would remain open. We are committed to not closing any of the company's 12 U.S. breweries. The visitor center with daily tours would continue to be a central part of visiting St. Louis. Grant's Farm and the Clydesdales, are all-important elements of the heritage of Budweiser, Anheuser-Busch and the city of St. Louis

FindingsRQ3: : What approaches to crisis communication were utilized in the crisis communication social media campaigns carried out by InBev/Anheuser-Busch and opponents of the merger?

InBev/Anheuser-Busch:● Used contingency approach to crisis communication while opponents relied on press agentry.

● In certain contexts, InBev/Anheuser produced traditional and social media content that highlighted the advantages of the merger.

● In other contexts, InBev/Anheuser adopted their message to suit concerns raised by publics.

● InBev/Anheuser were constantly altering the campaign to reflect newly emerging concerns.

FindingsExamples of InBev/Anheuser’s contingency approach:

● When charities expressed worries about funding cuts, InBev/Anheuser reassured them that the new company would not cut charity donations.

● When concerns about jobs arose, InBev/Anheuser stated that breweries would not be closed.

● When concerns about product taste arose, InBev/Anheuser stated that production changes were not planned.

FindingsOpponents of the merger relied primarily on press agentry:

● Opponents of the merger did not exhibit this contingency approach to crisis communication.

● Most utilized press agentry tactics without alteration.

For example:

● Union activists highlighted the detrimental effect the merger would have on union employees

● Consumer activists argued that the mystique of the Anheuser-Busch would be destroyed

FindingsThe weakness of the activists groups’ approach:

They stuck to their message but did not significantly alter it in face of counter messages from InBev/Anheuser Busch.

Even when InBev/Anheuser-Busch updated their campaign messages to reflect new developments, the activists did little to transform their campaigns.

The activists’ social media websites, for example, remained stagnant and when updated, repeated the same messages over and over.

Conclusion & Discussion

● Much has been written about the power that social media provides activist groups.

● The InBev/Anheuser case demonstrates that organizations can harness the same power to counter anti-merger challenges from activists.

● When the controversy regarding the merger became evident, InBev/Anheuser-Busch and opponents of the merger both turned to social media to get their voice heard.

● InBev/Anheuser-Busch's campaign, however, was more successful because it was constantly adapting to changes.

● Anheuser-Busch/InBev made sure their social media platforms were being updated to reflect new challenges to the merger.

Conclusion & Discussion

● In contrast, activist groups utilized social media in a static manner: they presented their core message and stuck to it without much alteration.

● Activists were not working in a coordinated pattern. Most were single issue activists (e.g. opposed to merger because it would increase foreign owners, alter taste, deplete jobs).

● Activists operated independently and there was no 1 organized entity against the merger.

Conclusion & Discussion

● This disjointedness meant that many groups did not see or recognize the need to update their messages to reflect challenges from InBev/Anheuser Busch.

● This project demonstrates that although social media is a powerful tool for activists groups, it is not a magical solution. Without organization and coordination, the power that social media gives to activist groups is limited