And now, the downside over Anheuser Busch InBev

AB's board has finally accepted InBev's offer. Having castigated the folks who went on and on about how America couldn't allow its beer to be sold to Belgium, I feel it's also important to elucidate the downside of this deal for the US.

AB had a lot of non-core assets like theme parks. Management perks and distribution and union agreements also made their costs higher.

Now that InBev had to sweeten its offer by a large sum, it will be under even more pressure to produce cost cuts, with Ann Gilpin, a Morningstar analyst, saying that there are in fact very little opportunities for synergies, since InBev and Anheuser have little overlap in the US. Therefore, InBev will certainly have to sell the parks and Clydesdales, and put pressure on unions and distributors.

Gilpin also mentions integration risks, as the companies have markedly different cultures, but that was true even before InBev sweetened its offer. Besides, the money grubbing capitalists can take care of themselves.

The unions will find it harder to defend the interests of their workers. The Coloradoan has this report:

The Teamsters Union, which represents more than 500 A-B workers in Fort Collins and 7,000 in the U.S. and Canada, raised doubts about InBev's promises not to close plants or cause "any significant job losses" among production workers.

In an e-mail to reporters, Jack Cipriani, director of the Teamsters Brewery and Soft Drink Workers Conference, said InBev CEO Carlos Brito "has a reputation as a cost-slasher, and always at the expense of workers. Given the record amount of debt tied to this acquisition, his commitments that he will not close any Anheuser-Busch plants in the U.S. or cause significant production job losses raise major credibility issues for us."

Cipriani has asked to meet with Brito and Teamsters president Jim Hoffa plans to host a meeting of union representatives from InBev's breweries in Europe, Brazil and Canada to find out more about InBev's practices.

"Our core values include protecting good-paying American jobs and their communities, as well as preserving health care and pension benefits for all workers," Cipriani said.

"We know that our European, Brazilian and Canadian counterparts have similar values. We look forward to learning about InBev from them and to seek their assistance as allies in our fight to protect our members."

This acquisition also doesn't do any good for the US' trade balance. Anheuser Busch InBev will still sell lots of beer in the US, but their profits will be repatriated to ABI shareholders, not all of whom live in the US. Countries cannot permanently sustain a large foreign trade deficit.

Lastly, there is the effect on culture. It is not good to have all your cultural institutions bought or co-opted by large foreign businesses. They have no incentive to keep local ties, and St. Louis will surely be poorer in some way in the end. InBev pledged to keep all AB's breweries running, and they may well do so if they can sell enough beer abroad, but everything else is going to get cut. That means less money going through the local economy at minimum.