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Anheuser-Busch says InBev is deceiving shareholders about the attempted takeover

Tuesday, July 8, 2008 | 6:12 p.m. CDT; updated 11:19 a.m. CDT, Tuesday, July 22, 2008

ST. LOUIS — Anheuser-Busch claims that Belgian brewer InBev’s unsolicited takeover bid isn’t just bad for the bottom line, but is an “illegal scheme” that threatens to defraud Anheuser-Busch shareholders if a federal judge doesn’t step in.

Anheuser-Busch Cos. Inc. made the claim in a lawsuit filed late Monday, just hours after InBev SA filed its own motion seeking to oust Anheuser-Busch’s board of directors. The lawsuit, filed in St. Louis federal court, claims that InBev is deceiving Anheuser-Busch shareholders about the company’s $46 billion takeover bid by concealing a number of facts.

The suit says InBev doesn’t have the solid financing to underwrite the deal, as the company claims, and that it has not disclosed that it operates a brewery in Cuba, which could complicate its efforts to operate in the United States.

“Anheuser-Busch is asking the court to prevent InBev from taking any further steps to solicit Anheuser-Busch’s shareholders until it provides full and accurate information concerning its proposal,” Gary Rutledge, Anheuser-Busch’s vice president of legal and government affairs said in a statement Tuesday.

InBev did not return a message seeking comment Tuesday. But the company did make a public appeal for support of its bid in Anheuser-Busch’s hometown.

InBev took out a full-page ad in Tuesday’s St. Louis Post-Dispatch, saying the takeover would make for a stronger, more competitive global company. It says Budweiser would be expanded globally, and St. Louis would serve as North American headquarters.

Anheuser-Busch questioned that promise in its lawsuit, saying InBev’s presence in the U.S. could be prohibited by federal law because of the brewer’s operations in Cuba.

InBev operates the Bucanero SA brewery in Cuba, according to the lawsuit, which brews, sells and exports beers including the Bucanero, Cristal and Mayabe brands. The brewery employs 570 people and controls about 44 percent of the Cuban beer market.

A U.S. law, called the Trading with the Enemy Act, might prohibit InBev from “being managed, supervised or otherwise monitored from the United States” because of its Cuban holdings, according the lawsuit.

The suit also questions whether InBev has truly lined up the financing it would need to pay $46 billion in cash for Anheuser-Busch, which amounts to $65 a share.

“Given the state of the credit markets today, no group of financial institutions would unconditionally commit $40 billion to a borrower to pursue a hostile acquisition,” the suit said, adding, “Any commitment letters InBev has received are certainly laden with conditions leaving the proposed financing banks free to walk away in any number of circumstances ...”

Meanwhile, InBev’s motion filed Monday with the U.S. Securities and Exchange Commission appeals directly to Anheuser-Busch shareholders. The company wants shareholders to fire Anheuser-Busch’s board of directors and replace it with a slate chosen by InBev.

Anheuser-Busch’s current board rejected InBev’s offer, saying it undervalues the company. InBev said the $65 a share price is far above the $50 a share that the stock was worth before rumors about InBev’s offer began to circulate.

Anheuser-Busch’s stock rose 2 cents to close at $61.76 Tuesday.


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