Anheuser-Busch sues takeover suitor

By Shane Starling

- Last updated on GMT

Anheuser-Busch is suing Belgian brewer InBev for allegedly
misleading its shareholders over its mooted $46.3bn takeover bid.

InBev has been in the throes of a move to oust a section of the A-B board and replace it with its own as it seeks to consolidate its takeover bid, but A-B is seeking an injunction against the action. In its suit filed in the US District Court for the Eastern District of Missouri, A-B said InBev's plans were "illegal"​ in that it was trying to buy A-B at "a bargain price"​ through "deceptive marketing".Fully informed ​A-B said it had filed the lawsuit because it wanted its shareholders to be fully informed about InBev's unsolicited proposal to acquire A-B. A-B's assets include 50 percent of Mexico's Grupo Modelo and 27 percent of China's Tsingtao Brewery. The suit alleges InBev made "false and misleading statements"​ about its $65-a-share offer for A-B. A-B bases this allegation on the fact InBev assured its shareholders it had "fully committed financing"​ when this was not the case. "No group of financial institutions would unconditionally commit $40 billion to a borrower to pursue a hostile acquisition given the state of the credit markets today,"​ A-B said in its submission to the court. Cuban crisis? ​ A-B also said the fact InBev has arrangements in Cuba that include brewing Beck's beer precluded it from establishing a headquarters in the US, because of conditions of the trade embargo the US has imposed on the communist state. Under Cuban Assets Control Regulations, US operations are prohibited from "unlicensed"​ transactions with Cuba without US government approval. A-B says InBev failed to relate this state of affairs to its shareholders. InBev's Cuban business, Bucanero SA, has more than 570 full-time employees and a 44 percent market share of beer sales on the island. Its brands include Bucanero, Cristal and Mayabe. Analysts expect InBev will sell or restructure its Cuban operation if it becomes a stumbling block in its attempt to buy A-B. Bucanero accounts for only 0.5 per cent of InBev's turnover. A-B is the biggest brewer in the US. Its products which include its flagship brand, Budweiser, account for 48.5 per cent of domestic beer sales. InBev legal actions ​A-B's legal move comes after InBev threatened legal action if its bid was thwarted by A-B. In a letter on its website last week, InBev said if communications between the two brewers collapsed it would consider pursuing its own court action. Indeed InBev filed a suit in Delaware to remind A-B shareholders of their right to remove its board of directors if it so wished. "Under Anheuser-Busch's charter and Delaware law it is clear thatthe eight directors elected after 2006, who together constitute a majority of theAnheuser-Busch Board, are subject to removal and replacement without cause through the written consent procedure,"​ said InBev chief executive officer, Carlos Brito. He added: "The purpose of the filing is merely to confirm InBev's strong belief that the five directors elected in 2006 may also be removed and replaced through that same mechanism."

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