Missouri Business Alert will be looking back at the top five stories that shaped particular industries or regions in the state in 2012. Keep checking back to find out what 2012’s biggest news-making events were where you live and where you work.
A-B InBev Buys Grupo Modelo
The nation’s largest beer manufacturer became even larger in July as Anheuser-Busch InBev acquired Mexico’s Grupo Modelo, makers of Modelo and Corona beers among other products. The merger began in late June when A-B InBev began discussions to increase its holdings in Grupo Modelo from 50 percent to full ownership, a deal speculated at the time to be worth as much as $12 billion. Instead, when the purchase was finalized after a little more than a week of negotiations the asking price came to $20.1 billion. Although the cost went up, the resulting merger still gave AB InBev 53 percent of the market share.
A deal that big—one involving seven of the world’s top 10 selling beer brands—couldn’t happen without piquing government interest in possible antitrust issues. In October the Justice Department announced it might not approve the deal as originally written, meaning A-B InBev could have to sell at least one of its brands to bring its market share back to federally acceptable levels. In November an alternative possibility emerged: the sale of a large brewery. As 2012 closed no action was taken to ease government antitrust concerns. Once the sale clears with federal regulators it is expected to conclude early in 2013.
Mamtek Fallout Ends in Legal Troubles
When sweetener manufacturer Mamtek U.S. Inc. shuttered its new Moberly sucralose plant in 2011 it meant more than the loss of 600 proposed new jobs. The company bankrolled the construction of the plant in part through $39 million in bonds from the city. However, construction never finished and the plant went into default after Mamtek missed its August 2011 bond payment. Mamtek CEO Bruce Cole was subsequently charged in September 2012 with stealing and four counts of securities fraud for allegedly using $700,000 of the bond money for personal reasons.
Cole was extradited to Randolph County, Missouri following a hearing in Orange County, California where he was arrested. His initial court appearance was October 22; the full trial will begin later in 2013. The unfinished Mamtek plant’s assets were sold at auction in October for $1.8 million.
Big Businesses Move Out of STL
A yearlong exodus saw several major corporations move their headquarters out of St. Louis, most of them due to changes in ownership. Among the transitions were Charter’s relocation to Stamford, Connecticut; Solutia leaving the Town & Country district after a purchase by Eastman Chemical; and Ralcorp’s speculated move after being bought by ConAgra in November. Departures such as these resulted not only in the continued growth in the number of vacant office spaces throughout the city and county but in a diminishing of St. Louis’s status as an entrepreneurial hub.
Boeing Slashes Defense
Cost cutting came to Boeing in November as the aviation corporation announced a restructuring of its Defense, Space and Security division, along with 30% reduction in the number of management positions compared to 2010.
Boeing’s defense department, which is based in St. Louis, reportedly provides as much as 40 percent of the company’s revenue. However, government defense contractors such as Boeing are reducing overhead in anticipation of cuts to the federal defense budget following the reelection of president Obama in November. A memo from executive vice president Dan Muilenburg to Boeing employees indicated the restructuring would save the company about $4 billion.
Boeing hasn’t provided any estimate of the number of non-management jobs the restructuring will affect, as it intends to move many workers to its more successful commercial ventures.
Stifel Financial Buys KBW
Stifel Financial continued its series of bank purchases when it announced the pending acquisition of New York-based investment bank KBW for $575 million on November 5. The deal, made using a combination of cash and common stock, would be the largest acquisition in Stifel’s history if it goes through as expected in late January. The purchase doesn’t come without risk, however; as the St. Louis Business Journal reported, KBW could be required to pay Stifel as much as $17.26 million if the deal should somehow fall through during the approval process.
Stifel’s deal for KBW was approved by the Federal Trade Commission in late November. The last hurdle now appears to be the approval by KBW’s shareholders, which will be determined with a meeting and vote in New York on January 30. Stifel Financial also announced the acquisition of another New York company, investment banking group Miller Buckfire, in December.