InBev, the world’s largest brewer, said on Thursday it would launch a hostile bid for Anheuser-Busch as its US rival rejected its $46bn bid as “financially inadequate”.
In court documents filed in the Court of Chancery in Delaware, InBev said it was preparing to launch a proxy battle seeking the removal of Anheuser’s entire board, citing “delays and apparent plans to attempt to block the acquisition”.
Shortly after the filing, Anheuser formally rejected InBev’s offer. August Busch IV, Anheuser’s chief executive, suggested in a letter to Carlos Brito, InBev’s chief executive, that the Belgian-Brazilian group was seeking to take advantage of the low level of the dollar and subdued US stock markets with an offer that undervalued Anheuser’s earnings potential.
While InBev said it still wanted a “constructive dialogue” over its $65-a-share offer, the exchange set the stage for a high-profile international battle for control of Anheuser, which controls almost half of the US beer market.
The battle for control of the maker of Budweiser and Michelob beers will unfold during a presidential election campaign in which free trade and foreign investment in the US is likely to be a significant theme.
InBev’s court filing said that it had been told by Mr Busch before launching the bid that he was opposed to any offer, and that Anheuser was “not for sale”. Mr Busch, according to InBev, also said he and his board were committed to the company’s independence.
In its letter to InBev, Mr Busch said Anheuser had developed plans to increase targeted savings to more than $1bn by 2010, building on an existing programme aimed at cutting an initial $400m in costs. The brewer is to give further details of its cost savings and plans “for accelerated earnings growth” to investors today.
InBev, meanwhile, is asking the court for a declaratory ruling that would confirm the shareholders’ right to remove all 13 of Anheuser’s board members, without giving cause.
The brewer is asking for clarification of the legal status of five of the directors appointed in 2006, before changes were made that allow the removal of board directors by written consent.
John Coffee, a professor of corporate law at Columbia University, said the move to request the ruling from the Delaware courts was highly unusual, and characterised the filing as “an initial opening tactic” by InBev’s legal team.
