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Easy M&A

XY Inbev

#Food & Beverage
ProHub Comment

This is a well-structured M&A case that tests both qualitative strategic thinking and basic quantitative skills. The candidate must recognize that while the CEO framed the problem around general growth strategies, the core constraint is debt reduction, requiring a focus on divestiture. The case progresses from strategic analysis (identifying which beverage line to divest) to valuation calculation (determining which specific brands to sell to raise ~$100M), with clear exhibits supporting each step.

Estimated Time 15 minutes
Difficulty Easy
Source Duke
50 / 100
Your client, XY Inbev, is a multinational drink and brewing company. About a decade ago, XY acquired a large competitor that made the company the market leader, but also left it with a massive debt. Today, XY’s growth strategy of acquiring competitors is nearing its limits as no large rivals remain to be taken over without goading competition authorities. The CEO has asked you to brainstorm some new strategies for the company.

Clarifying Information

Company information:

  • Headquartered in Belgium. XY has extremely established brands in developed markets, but less established brands in emerging markets.
  • Owns entire supply chain for all products.
  • Debt from the acquisition is estimated to be $90M. Investors’ concerns about debt have caused company shares to steadily decrease over the past three years.

Industry/Competition information:

  • XY is the market leader by a long shot and generates half the industry’s global profits.

Product information:

  • XY’s beverages include both alcoholic drinks (beer, cider, hard seltzer ONLY) and non-alcoholic drinks (energy drinks, sodas ONLY).
  • XY’s most popular beverage line is beer; it sells ~650 beer brands in 150 countries.