Dethroning the King (33 page)

Fernández made a practice of responding with a polite “thank you” to every e-mail that dropped into his inbox, regardless of its level of importance. It was an endearing and gracious habit, and it wasn't atypical for a man of his cultural background. It got him into hot water, though, once Modelo became enmeshed in its talks with Anheuser.

“The lawyers freaked out on him about that,” said one of Modelo's advisors. “Even when he gets an e-mail with newspaper clips, he writes back ‘Thank you. ' And you're like, ‘Don't do that!' ” Modelo's lawyers didn't want someone to refer to Carlos's response as “proof” that he had read a particular e-mail if, in fact, he hadn't.

Fernández espoused the same conservative values his family and the other Modelo families had always upheld. His job wasn't an easy one—he had to cater to the five family branches that co-owned Modelo while also managing the brewery and representing its interests in Mexican business and politics. The circle of wealthy corporate families in Mexico is relatively small, and their fates tend to be inextricably braided together. His straight-arrowed devotion to Modelo at an early age also set him apart from The Fourth, whose more casual attitude toward work bled well into his 40s. And while Carlos and August IV were both young CEOs, Carlos had been branded as Modelo's heir apparent in his late 20s when he was promoted to the company's board. August IV still hadn't convinced certain detractors that he deserved the CEO's job even after it was awarded to him.

Still, Fernández and The Fourth got along relatively well. August IV knew not to wear certain parts of his temperament—the partying and womanizing, namely—on his sleeve. “I think August could hide that side of him pretty well when he wanted to,” said Harry Schuhmacher. “There are stories, and things get out, but if he needed to play the good boy he could. He was a Tiger Woods tragic character, where he could have this outward appearance of a sober executive and then also have this other side of him.”

On paper, Fernández and August IV also shared one thing in common. Fernández's connection to Modelo came through his family. In his case, it began with his uncle Don Antonino, the longtime Modelo CEO who had sealed the company's original agreement with Anheuser-Busch. Carlos began tagging along at Don Antonino's side during visits to the company's Mexico City brewery at age 12. By high school, he was working there part-time, hauling sacks of grain and absorbing as much information as he could. Don Antonino, who had fought as a Nationalist in the Spanish civil war and had no sons of his own, commanded broad respect in the industry throughout his 30-year tenure and was a valuable mentor to his young nephew. Fernández returned the favor by holding Antonino in the deepest respect. He kept a portrait of his elder hanging on the wall of the sleek boardroom in their family's offices—pictures of various family members were pretty much everywhere—and he liked to shuffle guests into the room and direct them reverentially toward the piece of art.

Fernández was elected to Modelo's board in 1996 to fill the vacancy caused by the unexpected death the year before of Pablo Aramburuzabala, his father-in-law and a key controlling shareholder, at age 63. Just a year later, at only 30 years of age, he was named chief executive of Modelo to replace his uncle Antonino.

Both Carlos and August IV faced significant pressure, as leaders of a younger generation whose elders were still a strong presence at their companies. Carlos sat down several times over the years with The Fourth to share his experiences in dealing with Modelo's older scions, hoping that it might help to improve the frigid dynamic between The Fourth and his father. August IV's tether to his company's governing board of directors was much shorter than Carlos's. And August IV had no like-minded fellows-at-arms who were as strong a presence as María Asunción Aramburuzabala.

María, a striking woman of 45 who had inherited her father's stake in Modelo upon his death, was in many ways an ideal business partner for Carlos. She was his sister-in-law, the granddaughter of one of Modelo's founders, and the richest woman in Mexico. And while Carlos's skills were strong on the operating side of the business, her savviness lay more in the area of finance. However, they operated with similar intentions when it came to Modelo's future.

When she inherited her father's Modelo ownership, María had been unemployed and raising two children, and had almost no business experience. She decided to throw herself into the family business rather than letting others control her fate, and from an office the size of a broom closet, she made two of Modelo's bankrupt yeast companies profitable within a year of taking them over. María proceeded to build a reputation as a savvy businesswoman who rivaled the men in her family, and in 2000, she outmaneuvered a competitor to win control of a 20 percent stake in Mexican media giant Televisa.

Known by the nickname Mariasun, she was married to Antonio “Tony” Garza Jr., the son of a Texas gas station owner who served as U.S. ambassador to Mexico under President George W. Bush. Garza was tight with Bush, the former governor of Texas, who first appointed Garza as Texas's 99th secretary of state before naming him head of one of the United States' largest embassies. The “golden couple's” 2005 wedding drew the attendance of former First Lady Laura Bush and kept breathless gossip columnists enthralled for months on both sides of the border.

By 2009, the year in which
Fortune
magazine named her the world's 26th most powerful woman at the age of 46, María was serving as a member of several major companies' boards of directors and living in a palatial home in Mexico City with Garza, who decided to abandon Texas politics for a career as a lawyer and consultant. The choice was certainly a defensible one, given the size of his wife's beer fortune. She shared her windfall with her mother and sister, but there was clearly plenty of cash to go around. María's name was frequently tossed into the same sentences as Carlos Slim's, the Mexican tycoon whose fortune has ranked larger at points than those of either Bill Gates or Warren Buffett.

“We really didn't know her until she took her dad's spot on the board, and then she kind of ballooned,” said one former Anheuser-Busch executive, who wistfully described Aramburuzabala as “foxy.” “She's a sharp dresser, and has a smart business head on her shoulders. She really is something.”

It wasn't all praise, though, for the two young minds behind Modelo and their families. Economists have railed since the 1990s against the policies that allowed a handful of Mexicans to become billionaires by controlling giant, monopolistic pieces of the country's telephone, cement, silver, and beer markets. The beer industry, however, has brewed fortunes for dozens of families around the world over the past two centuries. María wasn't even the richest person whose wealth was tied up in the drama that unfolded between InBev and Anheuser-Busch. In 2007, just before the global banking system collapse decimated inheritances worldwide, a
Forbes
magazine list of the world's richest people pinpointed four characters with even larger bank accounts who also played roles of varying degrees in the saga.

Two of those were somewhat tangential. Jack Taylor, founder of St. Louis-based Enterprise Rent-A-Car, ranked with his family as the world's 37th-richest person with $13.9 billion, ahead of three Russian metal tycoons and corporate raider Carl Icahn. Taylor, who was 84 the year the list came out, built his fortune on rental cars. His son Andrew, who took over as CEO of Enterprise in 1994, was a member of Anheuser-Busch's board and a company shareholder when InBev launched its takeover attempt. Julio Mario Santo Domingo, the Colombian patriarch of his own wealthy family who was born the year after Jack Taylor, ranked 132nd on the list that year with $5.7 billion. The Santo Domingo Group controls a broad portfolio of companies, but one of its key holdings at the time of InBev's bid was a 15.1 percent stake in InBev rival and potential party-crasher SABMiller.

Not much further down in the
Forbes
tally, his name interspersed between those of telecommunications tycoons and financiers, sat InBev's Jorge Paulo Lemann with a fortune of $4.9 billion. Lemann's business partner Marcel Telles ranked 432nd with $2.2 billion, followed finally by Mariasun. Her estimated $2 billion estate sat tied for 488th with the estate of Carlos Sicupira, the third member of InBev's Brazilian triumvirate.

Fifteen years into their tumultuous partnership, with InBev knocking on the door, Anheuser-Busch and Modelo were forced back to the negotiating table for a new round of talks. The high stakes both companies were now facing made their earlier warfare look like a series of sandbox spats.

For Anheuser-Busch, this literally meant everything. A deal to merge with Modelo—or at the very least, a near-deal that could be used to threaten InBev into making a higher bid—was its only realistic defensive option. Modelo, meanwhile, sensed blood in the water, but it knew its bargaining position was precarious. The talks with Anheuser-Busch were likely to produce a binary result—Modelo could either execute a huge financial coup or suffer a monumental loss in power and leverage. If the Mexicans played their cards right, they might finally win retribution by selling the company at a high price to a desperate Anheuser-Busch. If not, they could have to watch helplessly as Anheuser's half-stake fell into the hands of InBev, whose strict operating style might make it an even tougher partner to deal with.

The first phone call Fernández got from Anheuser-Busch during the takeover fight actually came from August III. The Third reached Carlos on his cell phone on Saturday, May 24, the day after news of InBev's interest first hit the papers, to see whether it was true that Spain's Banco Santander was lending money to InBev to help in the effort. Carlos was a member of Santander's international advisory board, and his family had long been one of the bank's major shareholders. With those connections, The Third thought he might know whether the Spanish were involved.

The Third was clearly upset by the takeover rumors, and it didn't help when Carlos expressed surprise that he had first heard news of InBev's plans through the media. Carlos was spending time that day with his family, and had no more information about Santander's involvement than anyone else. He had heard about it for the first time from the papers as well.

“Can you find out?” The Third asked. Carlos wasn't privy to that sort of information, however. There was nothing he could do to help.

Once InBev made its bid official, August IV's team wasted no time in firing up talks with Modelo. Tom Santel called Fernández to request a meeting just hours after reading InBev's fax during the strategy committee's session at the soccer park. On Thursday, June 12, the very next day, he hitched a plane to Mexico City, leaving instructions for his corporate planning team on how to handle the second day of the session without him. He spent Wednesday night prepping for the biggest pitch of his professional career.

Santel arrived at Fernández's family offices bearing a formal presentation, a copy of which he handed to Fernández as he launched into his pitch. And the pitch was big.

Anheuser-Busch wanted to buy the rest of Modelo, Santel explained. The company understood that to get Modelo on board, it was going to have to pay a higher relative price for Modelo's assets than InBev was offering for Anheuser's own business. Modelo's growth prospects were stronger than Anheuser's, and both companies knew it. So while he didn't have a number set in stone, Santel said Anheuser-Busch was willing to consider a deal that valued Modelo at roughly $15 billion, which ranked well above the prices paid for other beer companies in recent years.

Fernández was shocked to hear the Americans propose such a big number straight out of the gate. The suggestion that they should pay a rich price for Modelo, however, was just fine by him. He knew that Anheuser-Busch's back was against the wall. August IV and his team had limited time to negotiate a deal before InBev grew more aggressive.