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A-Ha Moments

Eroding Social Capital

Written by: Bill Sherman on Monday, 21 July 2008, 7:39 AM

You may have heard about the recent purchase of Anheuser-Busch by Belgian-Brazilian brewer InBev.

On June 17th, the The Wall Street Journal published a fascinating account how eroded social capital can have lasting effects.

In the early 1990’s August Busch III invited executives from Modelo (a Mexican brewer) to join him deep-sea fishing near Cabo San Lucas. At the time, A-B was negotiating to buy a minority stake in Modelo.

During the trip, Busch hooked a huge marlin and fought to reel it in (what might be a four-hour process). That afternoon, Busch’s phone rang, and he handed the reel to a Modelo executive. Busch soon announced that he had to head home immediately, leaving the Modelo executives stunned with an uncaught marlin “the one that got away.” In one moment, an attempt to build a relationship transformed into increased distance.

The relationship between Modelo remained cool and coridal because of that event. A-B bought a minority stake but never bought all of Modelo. During the InBev unsolicited offer, one defense that analysts proposed was a full merger between A-B and InBev. However, that incident left a lasting distance between the two companies.

Source: Kesmodel, David. “For Anheuser-Busch and Modelo, Was it Hook, Line, and Deal Sinker.”The Wall Street Journal.  July 17, 2008. C1.

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