DEFM14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant To Section 14(a) of the
Securities Exchange Act of 1934
Filed by the
Registrant þ
Filed By a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to §240.14a-12
ANHEUSER-BUSCH COMPANIES, INC.
(Name of Registrant as Specified
In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the Appropriate Box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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October 6,
2008
Dear Fellow Stockholder:
You are cordially invited to attend a special meeting of
stockholders of Anheuser-Busch Companies, Inc. to be held on
November 12, 2008 at the Crowne Plaza Hotel &
Exhibition Center Meadowlands, located at Two Harmon Plaza,
Secaucus, NJ at noon Eastern Standard Time.
At the special meeting, you will be asked to consider and vote
upon a proposal to adopt the Agreement and Plan of Merger, dated
as of July 13, 2008, by and among Anheuser-Busch Companies,
Inc., InBev
N.V./S.A.
and InBevs indirect, wholly-owned subsidiary, Pestalozzi
Acquisition Corp. Under the terms of the merger agreement,
Pestalozzi Acquisition Corp. will merge with and into
Anheuser-Busch, with Anheuser-Busch continuing as the surviving
corporation following the merger. If the merger agreement is
adopted and the merger is completed, you will be entitled to
receive $70.00 in cash, without interest and less any applicable
withholding tax, for each share of Anheuser-Busch common stock
that you own as of the effective time of the merger.
After careful consideration, our board of directors has
unanimously determined that the merger agreement and the
transactions contemplated thereby, including the merger, are
advisable and fair to, and in the best interests of,
Anheuser-Busch and its stockholders. Therefore, our board of
directors has unanimously approved the merger agreement and
unanimously recommends that you vote FOR the
adoption of the merger agreement.
Your vote is very important, regardless of the number of
shares you own. We cannot complete the merger unless the
merger agreement is adopted by the affirmative vote of the
holders of a majority of the outstanding shares of our common
stock. The failure of any stockholder to vote on the proposal
to adopt the merger agreement will have the same effect as a
vote AGAINST the adoption of the merger
agreement.
Our board of directors considered a number of factors in
evaluating the transaction and also consulted with its financial
advisors and outside legal counsel. The attached proxy statement
contains a detailed discussion of the background of, and reasons
for, the merger, as well as the terms of the merger agreement. A
copy of the merger agreement is attached as Annex A to the
proxy statement. We encourage you to read the entire proxy
statement carefully and in its entirety. You may also obtain
more information about Anheuser-Busch from documents we have
filed with the Securities and Exchange Commission.
Whether or not you plan to attend the special meeting, please
complete, date, sign and return, as promptly as possible, the
enclosed proxy card in the accompanying reply envelope, or
submit your proxy by telephone or the Internet. If you have
Internet access, we encourage you to vote via the Internet. If
you attend the special meeting and vote in person, your vote by
ballot will revoke any proxy previously submitted.
On behalf of your board of directors, thank you for your
continued support.
Sincerely,
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Patrick T. Stokes
Chairman of the Board
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August A. Busch IV
President and Chief Executive Officer
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The proxy statement is dated October 6, 2008, and is first
being mailed to stockholders on or about October 10, 2008.
Anheuser-Busch
Companies, Inc.
One Busch Place
St. Louis, Missouri 63118
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
To Be Held On November 12,
2008
To the Stockholders of Anheuser-Busch Companies, Inc.:
A special meeting of stockholders of Anheuser-Busch Companies,
Inc., a Delaware corporation (Anheuser-Busch), will
be held on November 12, 2008, at the Crowne Plaza
Hotel & Exhibition Center Meadowlands, located at Two
Harmon Plaza, Secaucus, NJ at noon Eastern Standard Time, for
the following purposes:
1. To consider and vote on a proposal to adopt the
Agreement and Plan of Merger, dated as of July 13, 2008
(the Merger Agreement), by and among Anheuser-Busch,
InBev N.V./S.A., a public company organized under the laws of
Belgium (InBev), and Pestalozzi Acquisition Corp., a
Delaware corporation and an indirect wholly owned subsidiary of
InBev (Merger Sub). A copy of the Merger Agreement
is attached as Annex A to the accompanying proxy statement.
Pursuant to the terms and subject to the conditions of the
Merger Agreement, among other things, (a) Merger Sub will
merge with and into Anheuser-Busch, with Anheuser-Busch being
the surviving corporation (the Merger), and
(b) each outstanding share of Anheuser-Buschs common
stock, par value $1.00 per share (other than shares owned by
InBev, Merger Sub or any direct or indirect wholly owned
subsidiary of InBev or shares owned by Anheuser-Busch or any
direct or indirect wholly owned subsidiary of Anheuser-Busch, in
each case not held on behalf of third parties, and shares held
by stockholders who have perfected and not withdrawn a demand
for statutory appraisal rights, if any), will be converted into
the right to receive $70.00 in cash, without interest and less
any applicable withholding tax, as more fully described in the
accompanying proxy statement.
2. To consider and vote on any proposal to adjourn the
special meeting to a later date, if necessary or appropriate, to
solicit additional proxies in favor of the proposal to adopt the
Merger Agreement if there are insufficient votes to adopt the
Merger Agreement at the time of the special meeting.
3. To transact such other business as may properly come
before the special meeting or any adjournment or postponement
thereof.
Our board of directors has specified October 3, 2008, at
the close of business, as the record date for the purpose of
determining the stockholders who are entitled to receive notice
of, and to vote at, the special meeting. Only stockholders of
record at the close of business on the record date are entitled
to notice of and to vote at the special meeting.
The adoption of the Merger Agreement requires the affirmative
vote of the holders of a majority of the outstanding shares of
Anheuser-Buschs common stock, and the approval of the
proposal to adjourn the special meeting requires the affirmative
vote of the holders of a majority of the votes cast that are
entitled to vote at the special meeting, assuming a quorum is
present. Even if you plan to attend the special meeting in
person, we request that you complete, sign, date and return the
enclosed proxy or submit your proxy by telephone or the Internet
prior to the special meeting to ensure that your shares will be
represented at the special meeting if you are unable to attend.
If you have Internet access, we encourage you to vote via the
Internet. If you fail to return your proxy card or do not submit
your proxy by phone or the Internet and you fail to attend the
special meeting, your shares will not be counted for purposes of
determining whether a quorum is present at the meeting. The
failure of any stockholder to vote on the proposal to adopt the
Merger Agreement will have the same effect as a vote against the
adoption of the Merger Agreement but will not affect the outcome
of any vote regarding the adjournment proposal. If you are a
stockholder of record, voting in person at the special meeting
will revoke any proxy previously submitted. If you hold your
shares through a bank, broker or other custodian, you must
obtain a legal proxy from such custodian in order to vote in
person at the special meeting.
Please note that space limitations make it necessary to limit
attendance at the special meeting to stockholders as of the
record date (or their authorized representatives) holding
admission tickets or other evidence of ownership. The admission
ticket is detachable from your proxy card. If your shares are
held by a bank or broker, please bring to the special meeting
your statement evidencing your beneficial ownership of common
stock. All stockholders should also bring photo identification.
After careful consideration, our board of directors has
unanimously determined that the Merger Agreement and the
transactions contemplated by the Merger Agreement, including the
Merger, are advisable and fair to, and in the best interests of,
Anheuser-Busch and Anheuser-Buschs stockholders. Our board
of directors has unanimously approved the Merger Agreement and
the transactions contemplated by the Merger Agreement, including
the Merger.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR ADOPTION OF THE MERGER AGREEMENT AND
FOR THE PROPOSAL TO ADJOURN THE SPECIAL MEETING
TO A LATER DATE, IF NECESSARY OR APPROPRIATE, TO SOLICIT
ADDITIONAL PROXIES IN FAVOR OF THE PROPOSAL TO ADOPT THE
MERGER AGREEMENT IF THERE ARE INSUFFICIENT VOTES AT THE TIME OF
THE SPECIAL MEETING TO ADOPT THE MERGER AGREEMENT.
Your vote is important. Properly executed proxy cards with no
instructions indicated on the proxy card will be voted
FOR the adoption of the Merger Agreement and
FOR the proposal to adjourn the special meeting to a
later date, if necessary or appropriate, to solicit additional
proxies in favor of the proposal to adopt the Merger Agreement
if there are insufficient votes to adopt the Merger Agreement at
the time of the special meeting. Whether or not you plan to
attend the special meeting, please complete, sign and date the
accompanying proxy card and return it in the enclosed prepaid
envelope, or you may submit your proxy by telephone or the
Internet by following the instructions printed on your proxy
card. If you attend the special meeting, you may revoke your
proxy and vote in person if you wish, even if you have
previously returned your proxy card. Your failure to vote in
person at the special meeting or to submit a signed proxy card
will have the same effect as a vote AGAINST the
adoption of the Merger Agreement. Your prompt cooperation is
greatly appreciated.
Stockholders of Anheuser-Busch who do not vote in favor of the
adoption of the Merger Agreement will have the right to seek
appraisal of the fair value of their shares if the Merger is
completed, but only if they submit a written demand for
appraisal to Anheuser-Busch before the vote is taken on the
Merger Agreement and they comply with all requirements of
Delaware law, which are summarized in the accompanying proxy
statement beginning on page 78 and which are set forth
as Annex D to the proxy statement.
By Order of the Board of Directors,
JoBeth G. Brown
Vice President and Secretary
St. Louis, Missouri
October 6, 2008
TABLE OF
CONTENTS
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ii
SUMMARY
TERM SHEET
The following summary highlights selected information in this
proxy statement and may not contain all the information that may
be important to you. Accordingly, we encourage you to read
carefully this entire proxy statement, its annexes and the
documents referred to or incorporated by reference in this proxy
statement. Each item in this summary includes a page reference
directing you to a more complete description of that topic. See
Where You Can Find More Information beginning on
page 81. References to Anheuser-Busch, the
Company, we, our or
us in this proxy statement refer to Anheuser-Busch
Companies, Inc. and its subsidiaries, and references to
the board or the board of directors
refer to the board of directors of Anheuser-Busch Companies,
Inc., unless, in each case, otherwise indicated or the context
otherwise requires.
The
Parties to the Merger (Page 16)
Anheuser-Busch
Companies, Inc.
Anheuser-Busch Companies, Inc. is a Delaware corporation that
was organized in 1979 as the holding company of Anheuser-Busch,
Incorporated (ABI), a Missouri corporation whose
origins date back to 1875. ABI is the nations largest
brewer of beer and other malt beverages and produces and
distributes beer under many brand names, including Budweiser and
Bud Light. Anheuser-Busch holds a direct and indirect 50.2%
economic interest in Diblo, S.A. de C.V. (the operating
subsidiary of Grupo Modelo, S.A.B. de C.V., Mexicos
leading brewer of beer, whose brand names include Corona and
Negra Modelo). Anheuser-Busch is also the parent corporation of
a number of subsidiaries that conduct various other business
operations, including one of the largest theme park operators in
the United States, a major manufacturer of aluminum cans and the
largest recycler of aluminum beverage containers in the United
States. Our common stock is listed on the New York Stock
Exchange under the symbol BUD.
InBev
N.V./S.A.
InBev N.V./S.A. (InBev) is a public company
organized under the laws of Belgium with its principal executive
offices located at Brouwerijplein 1, 3000 Leuven, Belgium. InBev
manages a segmented portfolio of more than 200 brands. This
includes beers with global reach like Stella
Artois®
and
Becks®,
fast growing multicountry brands like
Leffe®
and
Hoegaarden®,
and many consumer-loved local champions like
Skol®,
Quilmes®,
Sibirskaya
Korona®,
Chernigivske®,
Sedrin®,
Cass®
and
Jupiler®.
InBev employs close to 89,000 people, running operations in
over 30 countries across the Americas, Europe and Asia Pacific.
In 2007, InBev realized 14.4 billion euro of revenue.
Pestalozzi
Acquisition Corp.
Pestalozzi Acquisition Corp., a Delaware corporation
(Merger Sub), is an indirect wholly owned subsidiary
of InBev. Merger Sub was formed exclusively for the purpose of
effecting the transactions described in this proxy statement.
The
Merger (Page 20)
The Agreement and Plan of Merger, dated as of July 13, 2008
(the Merger Agreement), provides that, upon the
terms and subject to the conditions set forth in the Merger
Agreement, Merger Sub will merge with and into Anheuser-Busch
(the Merger). Anheuser-Busch will be the surviving
corporation in the Merger and will continue to do business as
Anheuser-Busch Companies, Inc. following the Merger.
In the Merger, each outstanding share of Anheuser-Busch common
stock (other than shares owned by InBev, Merger Sub or any
direct or indirect wholly owned subsidiary of InBev or shares
owned by Anheuser-Busch or any direct or indirect wholly owned
subsidiary of Anheuser-Busch, in each case not held on behalf of
third parties, and shares held by stockholders who have properly
demanded statutory appraisal rights, if any (dissenting
shares)) will be converted into the right to receive
$70.00 in cash, without interest and less any applicable
withholding tax. We sometimes refer to such amount in this proxy
statement as the merger consideration.
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Effects
of the Merger (Page 58)
If the Merger is completed, you will be entitled to receive
$70.00 in cash, without interest and less any applicable
withholding taxes, for each share of our common stock owned by
you, unless you have perfected your statutory dissenters
rights of appraisal under Delaware law with respect to the
Merger. As a result of the Merger, Anheuser-Busch will cease to
be an independent, publicly traded company and will become an
indirect wholly owned subsidiary of InBev. You will not own any
shares of the surviving corporation following the Merger.
Treatment
of Options and Other Awards (Page 59)
Restricted Stock. All outstanding shares of
restricted stock and deferred stock units will vest in
accordance with their terms upon adoption by stockholders of the
Merger Agreement or upon the effective time of the Merger, as
applicable. At the effective time of the Merger, all outstanding
shares of restricted stock and deferred stock units will be
cancelled in exchange for the same merger consideration as the
outstanding shares of common stock in the Merger.
Stock Options. Upon adoption by stockholders
of the Merger Agreement or upon the effective time of the
Merger, as applicable, each outstanding option to acquire our
common stock under our equity incentive plans, will become fully
vested. At the effective time of the Merger, each stock option
will be cancelled and converted into the right to receive a cash
payment equal to the number of shares of our common stock
underlying the option multiplied by the amount by which $70.00
exceeds the exercise price of such option, without interest and
less any applicable withholding taxes.
The
Special Meeting (Page 17)
Date, Time and Place. The special meeting will
be held on November 12, 2008 at the Crowne Plaza
Hotel & Exhibition Center Meadowlands, located at Two
Harmon Plaza, Secaucus, NJ, at noon Eastern Standard Time.
Purpose. You will be asked to consider and
vote upon (1) the adoption of the Merger Agreement,
pursuant to which Merger Sub will merge with and into
Anheuser-Busch, (2) the adjournment of the special meeting
to a later date, if necessary or appropriate, to solicit
additional proxies in favor of the proposal to adopt the Merger
Agreement if there are insufficient votes to adopt the Merger
Agreement at the time of the meeting and (3) the
transaction of such other business as may properly come before
the special meeting or any adjournment or postponement thereof.
Record Date and Quorum. You are entitled to
vote at the special meeting if you owned shares of our common
stock at the close of business on October 3, 2008, the
record date for the special meeting. You will have one vote for
each share of our common stock that you owned on the record
date. As of the record date, there were 723,069,216 shares
of our common stock issued and outstanding and entitled to vote.
A majority of the shares of our common stock issued, outstanding
and entitled to vote at the special meeting constitutes a quorum
for the purpose of considering the proposals.
Vote Required. The adoption of the Merger
Agreement requires the affirmative vote of the holders of a
majority of the outstanding shares of our common stock entitled
to vote at the special meeting. Approval of any proposal to
adjourn the special meeting, if necessary or appropriate, for
the purpose of soliciting additional proxies requires the
affirmative vote of the holders of a majority of the votes cast
that are entitled to vote at the special meeting, assuming a
quorum is present.
Common Stock Ownership of Directors and Executive
Officers. As of August 31, 2008, the
directors and executive officers of Anheuser-Busch held in the
aggregate approximately 4.22% of the shares of our common stock
entitled to vote at the special meeting. Anheuser-Busch expects
that its directors and executive officers will vote all of their
shares of common stock FOR the adoption of the
Merger Agreement.
Voting and Proxies. Any stockholder of record
entitled to vote at the special meeting may submit a proxy by
telephone, the Internet, by returning the enclosed proxy card by
mail, or by voting in person by appearing at the special
meeting. If your shares of our common stock are held in
street name by your
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broker, you should instruct your broker on how to vote such
shares of common stock using the instructions provided by your
broker. If you do not provide your broker with instructions,
your shares of our common stock will not be voted, which will
have the same effect as a vote AGAINST the adoption
of the Merger Agreement. The persons named in the accompanying
proxy will also have discretionary authority to vote on any
adjournments or postponements of the special meeting.
Revocability of Proxy. Any stockholder of
record who executes and returns a proxy card (or submits a proxy
via telephone or the Internet) may revoke the proxy at any time
before it is voted at the special meeting in any one of the
following ways:
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if you hold your shares in your name as a stockholder of record,
by written notice to our Vice President and Secretary, at One
Busch Place, St. Louis, Missouri 63118;
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by attending the special meeting and voting in person (your
attendance at the special meeting will not, by itself, revoke
your proxy; you must vote in person at the special meeting);
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by submitting a later-dated proxy card;
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if you voted by telephone or the Internet, by voting a second
time by telephone or Internet; or
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if you have instructed a broker, bank or other nominee to vote
your shares of our common stock, by following the directions
received from your broker, bank or other nominee to change those
instructions.
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Recommendation
of Our Board of Directors (Page 25)
Board of Directors. The board of directors
unanimously (i) determined that the Merger Agreement and
the transactions contemplated thereby, including the Merger, are
advisable and fair to, and in the best interests of,
Anheuser-Busch and its stockholders, (ii) approved the
Merger Agreement and the transactions contemplated thereby,
including the Merger, and (iii) resolved to recommend that
the stockholders adopt the Merger Agreement, and directed that
such matter be submitted for consideration of the stockholders
of Anheuser-Busch at the special meeting. The board of directors
unanimously recommends that our stockholders vote
FOR the adoption of the Merger Agreement and
FOR the adjournment of the special meeting, if
necessary or appropriate, to solicit additional proxies.
Interests
of Anheuser-Buschs Directors and Executive Officers in the
Merger (Page 44)
In considering the recommendation of the board of directors, you
should be aware that our directors and executive officers may
have interests in the Merger that are different from, or in
addition to, your interests as a stockholder, and that may
present actual or potential conflicts of interest. Such
interests include (i) payment of pro-rata bonuses for the
current performance period, (ii) payment of integration
bonuses
and/or
enhanced severance payments and benefits upon a qualifying
termination of employment and (iii) the accelerated vesting
of specified equity awards and the accelerated payment of
deferred compensation
and/or
nonqualified retirement arrangements.
In addition, InBev has agreed in the Merger Agreement
(i) to appoint two current or former directors of
Anheuser-Busch (one of whom will be August Busch IV) to the
InBev board of directors for a three-year term following the
Merger and (ii) to provide Anheuser-Buschs directors
and officers with certain rights to indemnification and
insurance.
InBev has negotiated the terms of a consulting agreement with
August Busch IV. InBev may also seek to enter into other
arrangements with one or more of Anheuser-Buschs executive
officers regarding their ongoing employment with Anheuser-Busch.
Opinion
of Goldman, Sachs & Co. (Page 30)
Goldman Sachs delivered its opinion to Anheuser-Buschs
board of directors that, as of July 13, 2008 and based upon
and subject to the factors and assumptions set forth therein,
the merger consideration of $70.00 per share of Anheuser-Busch
common stock in cash to be received by the holders (other than
InBev and its direct
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and indirectly owned subsidiaries) of shares of Anheuser-Busch
common stock pursuant to the Merger Agreement was fair from a
financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated
July 13, 2008, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as
Annex B to this proxy statement. Goldman Sachs provided its
advisory services and its opinion for the information and
assistance of our board of directors in connection with its
consideration of the transactions contemplated by the Merger
Agreement. The Goldman Sachs opinion is not a recommendation as
to how any holder of shares of our common stock should vote with
respect to the Merger or any other matter. Pursuant to an
engagement letter between Anheuser-Busch and Goldman Sachs,
Anheuser-Busch has agreed to pay Goldman Sachs fees of
approximately $40 million for its services in connection
with the Merger, $10 million of which was paid after
execution of the merger agreement. If the Merger Agreement had
not been signed and InBev had instead withdrawn its proposal to
purchase Anheuser-Busch, Anheuser-Busch would have been required
to pay Goldman Sachs a fee of as much as $30 million,
depending on the date on which InBev had withdrawn its
proposal.
Opinion
of Citigroup Global Markets Inc. (Page 37)
Citigroup Global Markets Inc. (Citi) delivered its
opinion to our board of directors that, as of July 13, 2008
and based upon and subject to the factors and assumptions set
forth therein, the merger consideration to be received by the
holders of shares of our common stock pursuant to the Merger
Agreement was fair from a financial point of view to such
holders.
The full text of Citis written opinion, dated
July 13, 2008, which describes the assumptions made,
procedures followed, matters considered and limitations on the
review undertaken, is attached to this proxy statement as
Annex C and is incorporated into this proxy statement by
reference. Citis opinion was provided to
Anheuser-Buschs board of directors in connection with its
evaluation of the merger consideration from a financial point of
view. Citis opinion does not address any other aspects or
implications of the Merger and does not constitute a
recommendation to any stockholder as to how such stockholder
should vote or act on any matters relating to the proposed
Merger. Anheuser-Busch has agreed to pay Citi for its financial
advisory services in connection with the Merger a quarterly fee
of $500,000, during the term of Citis engagement, not to
exceed $2 million, and an additional fee of
$30 million, payable upon the consummation of the
Merger.
Financing
(Page 43)
InBev and Merger Sub have estimated that the total amount of
funds necessary to consummate the Merger and related
transactions will be approximately $54.8 billion, including
(i) the financing of the Merger, including payment of
related transaction charges, fees and expenses, and
(ii) certain fees and expenses and accrued but unpaid
interest on Anheuser-Buschs outstanding indebtedness.
InBev has said it intends to fund the transaction with new
credit facilities and equity financing. Funding of the equity
and debt financing is subject to the satisfaction of the
conditions set forth in the facilities under which the financing
will be provided. Consummation of the Merger is not conditioned
on the funding of InBevs financing or on InBev obtaining
financing.
In connection with an anticipated transaction with
Anheuser-Busch, InBev entered into the following definitive
financing arrangements, copies of which have been provided to us:
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US$45,000,000,000 Senior Facilities Agreement, dated as of
July 12, 2008, as amended as of July 23, 2008,
August 21, 2008 and September 3, 2008, for InBev and
InBev Worldwide S.A.R.L., arranged by Banco Santander, S.A.,
Barclays Capital, BNP Paribas, Deutsche Bank AG, London Branch,
Fortis Bank SA/NV, ING Bank N.V., J.P. Morgan PLC, Mizuho
Corporate Bank, LTD., the Bank of Tokyo-Mitsubishi UFJ, LTD. and
The Royal Bank of Scotland PLC, as Mandated Lead Arrangers and
Bookrunners, and Fortis Bank SA/NV, acting as Agent and Issuing
Bank.
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US$5,600,000,000 Bridge Facility Agreement, dated as of
July 12, 2008, as amended and increased to US$9,800,000,000
as of July 23, 2008, for InBev, and as further amended on
September 3, 2008, arranged by Banco Santander, S.A., BNP
Paribas, Deutsche Bank AG, London Branch, Fortis Bank SA/NV, ING
Bank N.V., J.P. Morgan PLC and The Royal Bank of Scotland
PLC, as Mandated Lead Arrangers and Fortis Bank SA/NV, acting as
Agent.
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Regulatory
Approvals (Page 53)
Under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the HSR
Act), and the rules promulgated thereunder by the Federal
Trade Commission (FTC), the Merger may not be
completed until notification and report forms have been filed
with the FTC and the Antitrust Division of the Department of
Justice (DOJ), and the applicable waiting period has
expired or been terminated. InBev filed on July 15, 2008,
and Anheuser-Busch filed on July 18, 2008, notification and
report forms under the HSR Act with the FTC and the Antitrust
Division of the DOJ. On August 18, 2008, Anheuser-Busch and
InBev received a request for additional information, commonly
referred to as a second request, from the Antitrust
Division of the DOJ under the HSR Act. The effect of the second
request is to extend the waiting period imposed by the HSR Act,
and the applicable waiting period has not yet expired or been
terminated.
The Merger is also subject to, and the parties obligations
to complete the Merger are conditioned on, approval by
governmental authorities in other jurisdictions under the
antitrust/competition laws of those jurisdictions. The
competition filing required in Brazil was filed by the parties
on August 1, 2008 and an unconditional clearance decision
was issued by the Brazilian Antitrust Commission on
September 17, 2008. The competition filing required in
Germany was filed by the parties on August 7, 2008 and an
unconditional clearance decision was issued by the Federal
Cartel Office on August 20, 2008. The competition filing
required in Mexico was filed by the parties on September 17,
2008. On August 12, 2008, InBev and Anheuser-Busch filed
requests for waivers of the obligation to file the competition
filings in Bosnia and Herzegovina, Montenegro and Serbia, in
each case with the applicable antitrust/competition authorities.
An unconditional clearance decision was issued by the Serbian
authority on September 12, 2008. InBev filed a voluntary
notification with the Office of Fair Trading in the United
Kingdom on August 26, 2008. Anheuser-Busch and InBev are
currently preparing the competition filings required by the
National Commission for Competition Defense in Argentina, the
Ministry of Commerce in China and the Antitrust Commission in
Uruguay, in each case under the applicable antitrust/competition
laws of those jurisdictions.
We cannot assure you that an antitrust or other regulatory
challenge to the Merger will not be made. If a challenge is
made, we cannot predict the result. These filings and approvals
are more fully described in The Merger
Regulatory Approvals beginning on page 53 of
this proxy statement. For a more detailed discussion of the
requirements regarding regulatory matters under the Merger
Agreement, please see The Merger Agreement
Agreements to Take Further Action and to Use Reasonable Best
Efforts beginning on page 64 of this proxy
statement.
Material
United States Federal Income Tax Consequences
(Page 52)
The exchange of shares of our common stock for cash pursuant to
the Merger Agreement generally will be a taxable transaction to
U.S. stockholders for U.S. federal income tax
purposes. U.S. stockholders who exchange their shares of
our common stock in the Merger will generally recognize gain or
loss in an amount equal to the difference, if any, between the
cash received in the Merger and their adjusted tax basis in
their shares of our common stock. You should consult your tax
advisor for a complete analysis of the effect of the Merger on
your federal, state and local
and/or
foreign taxes.
Conditions
to the Merger (Page 68)
Conditions to Each Partys
Obligations. Each partys obligation to
complete the Merger is subject to the satisfaction or waiver of
the following conditions:
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the Merger Agreement must have been adopted by (i) the
affirmative vote of the holders of a majority of the outstanding
shares of our common stock and (ii) the approval by 75% of
the ordinary shares of
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InBev present in person or by proxy at an extraordinary
shareholders meeting of InBev (InBev shareholders approved
the acquisition of
Anheuser-Busch
by InBev at InBevs extraordinary shareholders
meeting on September 29, 2008);
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no governmental entity shall have enacted, issued, promulgated,
enforced or entered any law or order that is in effect and
restrains, enjoins or otherwise prohibits the Merger or the
transactions contemplated by the Merger Agreement; and
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the applicable waiting period (and any extension thereof) under
the HSR Act shall have expired or been terminated, and approvals
and authorizations required from other applicable governmental
authorities shall have been obtained without the imposition of
detriments exceeding an
agreed-upon
level.
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Conditions to InBevs and Merger Subs
Obligations. The obligation of InBev and Merger
Sub to complete the Merger is subject to the satisfaction or
waiver of the following additional conditions:
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our representations and warranties must be true and correct,
subject to certain materiality thresholds;
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we must have performed in all material respects all obligations
required to be performed by us under the Merger Agreement at or
prior to the closing date;
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since the date of the Merger Agreement, there must not have been
any change, event, circumstance or development that has had, or
is reasonably likely to have, a Material Adverse Effect (as
defined in the Merger Agreement); and
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we must deliver to InBev and Merger Sub at closing a certificate
with respect to the satisfaction of the foregoing conditions
relating to representations, warranties and obligations.
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Consummation of the Merger is not conditioned on InBevs
obtaining financing.
Conditions to Anheuser-Buschs
Obligations. Our obligation to complete the
Merger is subject to the satisfaction or waiver of the following
additional conditions:
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the representations and warranties made by InBev and Merger Sub
must be true and correct, subject to certain materiality
thresholds;
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InBev and Merger Sub must have performed in all material
respects all obligations required to be performed by them under
the Merger Agreement at or prior to the closing date; and
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InBev must deliver to us at closing a certificate with respect
to the satisfaction of the foregoing conditions relating to
representations, warranties and obligations.
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Post-Closing
Agreements of InBev (Page 66)
InBev has agreed that, following the effective time of the
Merger:
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Anheuser-Buschs current headquarters in St. Louis,
Missouri will be the surviving corporations headquarters,
InBevs headquarters for North America (excluding Cuba) and
the global home of the flagship Budweiser brand;
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InBevs name will be Anheuser-Busch InBev
N.V./S.A.;
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InBev, after consultation with Anheuser-Buschs board of
directors, will nominate and cause to be elected two current or
former directors of Anheuser-Busch (one of whom will be August
Busch IV) to the board of directors of InBev, and each such
director shall be confirmed for a three-year term at
InBevs next annual general meeting of shareholders;
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InBev will preserve Anheuser-Buschs heritage and continue
to support philanthropic and charitable causes in St. Louis
and other communities in which Anheuser-Busch operates,
including Grants Farm and the Clydesdales
operations; and
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Anheuser-Busch will honor its obligations relating to Busch
Stadium.
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InBev has made a good faith commitment that it will not close
any of Anheuser-Buschs current 12 breweries located in the
United States, provided there are no new or increased federal or
state excise taxes or other unforeseen extraordinary events
which negatively impact Anheuser-Buschs business.
InBev has also reaffirmed its commitment to the three-tier
distribution system in the United States and has agreed to work
with Anheuser-Buschs existing wholesaler panel to
strengthen the relationship between the surviving corporation
and its wholesalers.
Voting
Agreement of Stichting InBev AK (Page 73)
The adoption of the Merger Agreement by InBev requires the
affirmative vote of the holders of 75% of the ordinary shares of
InBev common stock present in person or by proxy at an
extraordinary shareholders meeting of InBev. Stichting
InBev AK, InBevs controlling shareholder, has entered into
a voting agreement with Anheuser-Busch whereby it has agreed to
vote shares held by it, representing approximately 52.2% of
InBevs outstanding shares, and to cause other entities
bound to act in concert with it, representing approximately
11.2% of InBevs outstanding shares, to vote, in favor of a
resolution approving the Merger. InBev shareholders approved the
acquisition of Anheuser-Busch by InBev at InBevs
extraordinary shareholders meeting on September 29,
2008.
No
Solicitation of Other Offers (Page 66)
Subject to certain exceptions, the Merger Agreement provides
that Anheuser-Busch and its subsidiaries and their respective
directors and officers shall not, and Anheuser-Busch shall use
its reasonable best efforts to instruct and cause its and its
subsidiaries employees, investment bankers, attorneys,
accountants and other advisors or representatives not to,
directly or indirectly, initiate, solicit or knowingly encourage
any inquiries or the making of any proposal that constitutes or
could reasonably be expected to lead to, any acquisition
proposal (as defined in the Merger Agreement), engage in,
continue or otherwise participate in any discussions or
negotiations regarding, or provide any non-public information or
data to any person relating to, any acquisition proposal, or
otherwise knowingly facilitate any effort or attempt to make an
acquisition proposal.
Restrictions
on Recommendation Withdrawal (Page 67)
The Merger Agreement generally restricts the ability of our
board of directors to withhold, withdraw, qualify or modify its
recommendation that Anheuser-Busch stockholders adopt the Merger
Agreement. However, if Anheuser-Buschs board of directors
determines in good faith (after consultation with its outside
legal counsel) that the failure to withhold, withdraw, qualify
or modify this recommendation would be inconsistent with its
fiduciary duties under applicable law, then
Anheuser-Buschs board of directors may, subject to certain
notice requirements, withhold, withdraw, qualify or modify this
recommendation.
Termination
of the Merger Agreement (Page 69)
The Merger Agreement may be terminated at any time prior to the
consummation of the Merger, whether before or after stockholder
approval has been obtained:
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by mutual written consent of Anheuser-Busch and InBev;
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by either Anheuser-Busch or InBev (provided the party seeking to
terminate the Merger Agreement has not breached in any material
respect its obligations under the Merger Agreement in any manner
that shall have resulted in the failure of a condition to the
consummation of the Merger) if:
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the Merger is not completed on or before March 19, 2009
(the Termination Date);
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our stockholders do not adopt the Merger Agreement at the
special meeting or any adjournment or postponement thereof;
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a resolution approving the Merger shall not have been obtained
at InBevs extraordinary shareholders meeting
(however, InBev shareholders approved the acquisition of
Anheuser-Busch
by InBev at InBevs extraordinary shareholders
meeting on September 29, 2008); or
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there is any final and non-appealable action that permanently
restrains, enjoins or otherwise prohibits the Merger.
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prior to obtaining Anheuser-Busch stockholder approval, our
board of directors authorizes Anheuser-Busch to enter into an
agreement with respect to a superior proposal (as
defined in the Merger Agreement), we notify InBev of our intent
to enter into such agreement, we wait at least 72 hours
after giving such notice to InBev, our board determines that
such superior proposal remains a superior proposal (taking into
account any revised proposal made by InBev) and we pay a
termination fee to InBev concurrently with entering into such
other agreement;
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InBev or Merger Sub has breached any representation, warranty,
covenant or agreement made by them in the Merger Agreement, or
any such representation or warranty made by either of them shall
have become untrue, such that certain conditions to closing
would not be satisfied and such breach or condition is not
curable, or if curable, is not cured, within the earlier of
30 days after written notice of such breach or the
Termination Date; or
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all of the conditions to the obligations of InBev and Merger Sub
have been satisfied and InBev
and/or
Merger Sub fails to consummate the Merger within 30 days
after satisfaction of such conditions.
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our board of directors withholds, withdraws, qualifies or
modifies its recommendation that our stockholders adopt the
Merger Agreement;
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following the receipt of an acquisition proposal, our board of
directors fails to reaffirm its approval or recommendation of
the Merger Agreement as promptly as practicable after a
reasonable written request from InBev;
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following the public announcement of a tender offer or exchange
offer for outstanding Anheuser-Busch common stock, our board
fails to recommend against such tender offer or exchange
offer; or
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we have breached any representation, warranty, covenant or
agreement made by us in the Merger Agreement, or any such
representation or warranty made by us shall have become untrue,
such that certain conditions to closing would not be satisfied
and such breach or condition is not curable, or if curable, is
not cured, within the earlier of 30 days after written
notice of such breach or the Termination Date.
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Termination
Fee (Page 70)
We have agreed to pay InBev a termination fee of $1,250,000,000
if:
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we terminate the Merger Agreement in order to enter into an
agreement with respect to a superior proposal;
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InBev exercises its right to terminate the Merger Agreement in
certain circumstances involving a withdrawal, qualification or
modification of, or failure to reaffirm, our boards
recommendation of the Merger, or an uncured breach of the Merger
Agreement; or
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we or InBev terminate the Merger Agreement because the Merger is
not consummated by March 19, 2009, or because our
stockholders fail to adopt the Merger Agreement at the special
meeting and (x) at the time of such termination, a third
party shall have made an acquisition proposal which shall not
have been publicly withdrawn within a specified time period
prior to such termination and (y) we enter into,
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approve or consummate, a transaction contemplated by any third
party acquisition proposal within 12 months of the
termination of the Merger Agreement.
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If Anheuser-Busch pays a termination fee to InBev, such
termination fee shall be InBevs and Merger Subs sole
and exclusive remedy for monetary damages under the Merger
Agreement.
Specific
Performance (Page 71)
In addition to any other remedy that may be available to a
party, each of the parties is specifically authorized to obtain
an order of specific performance to enforce performance of any
covenant or obligation under the Merger Agreement or injunctive
relief to restrain any breach or threatened breach, including,
in the case of Anheuser-Busch, to cause InBev to seek to enforce
the terms of its financing with its lenders and to cause InBev
to consummate the Merger.
Appraisal
Rights (Page 78)
Under Delaware law, holders of our common stock who follow
certain specified procedures and who do not vote in favor of
adopting the Merger Agreement will have the right to seek
appraisal of the fair value of their shares of our common stock
as determined by the Delaware Court of Chancery if the Merger is
completed, but only if they comply with all requirements of
Delaware law (including Section 262 of the DGCL, the text
of which can be found in Annex D of this proxy statement),
which are summarized in this proxy statement. This appraisal
amount could be more than, the same as or less than the merger
consideration. Any holder of our common stock intending to
exercise appraisal rights, among other things, must submit a
written demand for an appraisal to us prior to the vote on the
adoption of the Merger Agreement and must not vote or otherwise
submit a proxy in favor of adoption of the Merger Agreement.
Your failure to follow exactly the procedures specified under
Delaware law will result in the loss of your ability to seek and
obtain appraisal rights.
Market
Price of Common Stock (Page 75)
The closing sale price of our common stock on the New York Stock
Exchange (the NYSE) on May 22, 2008, the last
trading day before the initial market rumors surrounding a
potential proposal by InBev to purchase Anheuser-Busch was
$52.58. The closing sale price of our common stock on the NYSE
on June 10, 2008, the last trading day before the
announcement by InBev of its proposal to purchase Anheuser-Busch
was $57.15. The closing sale price of our common stock on the
NYSE on July 11, 2008, the last trading day prior to the
announcement of the Merger, was $66.50. On October 3, 2008,
the last trading day before the date of this proxy statement,
our common stock closed at $65.10 per share.
Fees and
Expenses (Page 73)
Whether or not the Merger is consummated, all costs and expenses
incurred in connection with the Merger Agreement and the Merger
and the other transactions contemplated by the Merger Agreement
will be paid by the party incurring such expense, except that
(i) InBev will reimburse Anheuser-Busch for charges and
expenses incurred by Anheuser-Busch in connection with its
cooperation with InBev in InBevs efforts to obtain
financing, and (ii) the party paying a termination fee
under the terms of the Merger Agreement will reimburse the other
party for charges and expenses incurred in connection with any
suit brought to enforce payment of the termination fee.
9
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following questions and answers are intended to address
briefly some commonly asked questions regarding the Merger, the
Merger Agreement and the special meeting. These questions and
answers may not address all questions that may be important to
you as an Anheuser-Busch stockholder. Please refer to the
Summary Term Sheet and the more detailed information
contained elsewhere in this proxy statement, the annexes to this
proxy statement and the documents referred to or incorporated by
reference in this proxy statement, which you should read
carefully. See Where You Can Find More Information
beginning on page 81.
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Q.
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What am I being asked to vote on?
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A.
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You are being asked to adopt a Merger Agreement that provides
for the acquisition of Anheuser-Busch by InBev. Once the Merger
Agreement has been adopted by our stockholders and other closing
conditions under the Merger Agreement have been satisfied or
waived, Merger Sub, an indirect wholly-owned subsidiary of
InBev, will merge with and into Anheuser-Busch. Anheuser-Busch
will be the surviving corporation in the Merger and will become
an indirect wholly-owned subsidiary of InBev. You are also being
asked to vote to adjourn the special meeting to a later date if
necessary or appropriate to solicit additional proxies in favor
of the proposal to adopt the Merger Agreement if there are
insufficient votes to adopt the Merger Agreement at the time of
the special meeting. This proxy statement contains important
information about the proposed acquisition and the special
meeting of stockholders and you should read this proxy statement
carefully and in its entirety.
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Q.
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What will I receive in the Merger?
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A.
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Upon completion of the Merger, you will be entitled to receive
$70.00 in cash, without interest and less any applicable
withholding tax, for each share of our common stock that you own
at the effective time of the Merger, unless you have perfected
your appraisal rights with respect to the Merger. For example,
if you own 100 shares of our common stock at the effective
time of the Merger, you will receive $7,000 in cash in exchange
for your shares of our common stock, less any applicable
withholding tax. You will not own any shares in Anheuser-Busch
or the surviving corporation following the Merger.
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Q.
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When and where is the special meeting?
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The special meeting of stockholders of Anheuser-Busch will be
held on November 12, 2008, at the Crowne Plaza
Hotel & Exhibition Center Meadowlands, located at Two
Harmon Plaza, Secaucus, NJ, at noon Eastern Standard Time.
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Q.
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Who is entitled to vote at the special meeting?
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A.
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Only stockholders of Anheuser-Busch as of the close of business
on October 3, 2008, the record date for the special meeting
of stockholders, are entitled to receive notice of the special
meeting and to vote the shares of Anheuser-Busch common stock
that they held at that time at the special meeting, or at any
adjournment or postponement of the special meeting.
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Q.
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Who is entitled to attend the special meeting?
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A.
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Please note that space limitations make it necessary to limit
attendance at the special meeting to stockholders as of the
record date (or their authorized representatives) holding
admission tickets or other evidence of ownership. The admission
ticket is detachable from your proxy card. If your shares are
held by a bank or broker, please bring to the special meeting
your statement evidencing your beneficial ownership of common
stock. All stockholders should also bring photo identification.
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Q.
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What vote is required for Anheuser-Buschs stockholders
to adopt the Merger Agreement?
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An affirmative vote of the holders of a majority of the
outstanding shares of our common stock is required to adopt the
Merger Agreement. As of the close of business on October 3,
2008, the record date for the special meeting, there were
723,069,216 shares of Anheuser-Busch common stock issued
and outstanding.
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Q.
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What vote of our stockholders is required to approve the
proposal to adjourn the special meeting, if necessary or
appropriate, to solicit additional proxies?
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A.
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The proposal to adjourn the special meeting, if necessary or
appropriate, to solicit additional proxies requires the
affirmative vote of the holders of a majority of the votes cast
that are entitled to vote at the special meeting, assuming a
quorum is present.
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Q.
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How does Anheuser-Buschs board of directors recommend
that I vote?
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A.
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The board of directors, after careful consideration of a
variety of factors described in this proxy statement,
unanimously recommends that you vote FOR the
proposal to adopt the Merger Agreement and FOR the
proposal to adjourn the special meeting, if necessary or
appropriate, to solicit additional proxies if there are
insufficient votes to adopt the Merger Agreement at the time of
the special meeting. You should read The
Merger Reasons for the Merger; Recommendation of our
Board of Directors beginning on page 25 of this
proxy statement for a discussion of the factors that the board
of directors considered in deciding to recommend the adoption of
the Merger Agreement.
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How will InBev finance the Merger?
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A.
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InBev has entered into binding senior debt and bridge financing
facilities with its lender group prior to the time it entered
into the Merger Agreement. The proceeds of such facilities,
together with other commitments of InBev and cash on hand of
InBev and Anheuser-Busch, will be sufficient for InBev to make
all payments contemplated to be paid in connection with the
consummation of the Merger and the other transactions
contemplated by the Merger Agreement, and to pay all related
fees and expenses. The Merger is not conditioned upon the
funding by InBevs lenders of the senior debt and bridge
financing facilities or otherwise upon InBevs ability to
obtain financing.
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What happens if the Merger is not consummated?
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A.
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If the Merger Agreement is not adopted by our stockholders, or
if the Merger is not consummated for any other reason,
stockholders will not receive any payment for their shares in
connection with the Merger. Instead, Anheuser-Busch will remain
an independent public company and our common stock will continue
to be listed and traded on the NYSE. Under specified
circumstances, Anheuser-Busch may be required to pay InBev the
termination fee described under the caption The Merger
Agreement Termination Fees beginning on
page 70 of this proxy statement.
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Q.
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What do I need to do now?
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A.
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We urge you to carefully read this proxy statement, including
its annexes, and to consider how the Merger affects you. Even if
you plan to attend the special meeting, if you hold your shares
in your own name as the stockholder of record, please vote your
shares by completing, signing, dating and returning the enclosed
proxy card; using the telephone number printed on your proxy
card; or using the Internet voting instructions printed on your
proxy card. If you have Internet access, we encourage you to
vote via the Internet. You can also attend the special meeting
and vote in person. If you hold your shares in street
name, follow the procedures provided by your broker, bank
or other nominee.
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PLEASE DO NOT SEND YOUR STOCK CERTIFICATES WITH YOUR PROXY
CARD. YOU WILL RECEIVE DETAILED INSTRUCTIONS CONCERNING
EXCHANGE OF YOUR STOCK CERTIFICATES IF THE MERGER IS
CONSUMMATED.
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Q.
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How do I vote?
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A.
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You may vote by:
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signing and dating each proxy card you receive and returning it
in the enclosed prepaid envelope;
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attending the special meeting and voting in person;
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using the telephone number printed on your proxy card;
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using the Internet voting instructions printed on your proxy
card; or
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if you hold your shares in street name, follow the
procedures provided by your broker, bank or other nominee.
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11
If you return your signed and dated proxy card, but do not mark
the boxes showing how you wish to vote, your shares will be
voted FOR the proposal to adopt the Merger Agreement
and FOR the adjournment proposal. If you do not
return your signed and dated proxy card, your shares will not be
voted and the effect will be the same as a vote
AGAINST the adoption of the Merger Agreement, but
will not have an effect on the proposal to adjourn the special
meeting.
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Q: |
Is my vote confidential?
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A: |
Yes. It is the policy of Anheuser-Busch that all proxies,
ballots, and vote tabulations that identify the vote of a
stockholder will be kept confidential from Anheuser-Busch, its
directors, officers, and employees until after the final vote is
tabulated and announced, except in limited circumstances
including any contested solicitation of proxies, when required
to meet a legal requirement, to defend a claim against
Anheuser-Busch or to assert a claim by Anheuser-Busch, and when
written comments by a stockholder appear on a proxy card or
other voting material.
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Q.
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How can I change or revoke my vote?
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A.
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You have the right to change or revoke your proxy at any time
before the vote is taken at the special meeting:
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if you hold your shares in your name as a stockholder of record,
by written notice to our Vice President and Secretary, at One
Busch Place, St. Louis, Missouri 63118;
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by attending the special meeting and voting in person (your
attendance at the meeting will not, by itself, revoke your
proxy; you must vote in person at the meeting);
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by submitting a later-dated proxy card;
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if you voted by telephone or the Internet, by voting again by
telephone or Internet; or
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if you have instructed a broker, bank or other nominee to vote
your shares, by following the directions received from your
broker, bank or other nominee to change those instructions.
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Q.
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If my shares are held in street name by my
broker, bank or other nominee, will my broker, bank or other
nominee vote my shares for me?
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A.
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Your broker, bank or other nominee will only be permitted to
vote your shares if you instruct your broker, bank or other
nominee how to vote. You should follow the procedures provided
by your broker, bank or other nominee regarding the voting of
your shares. If you do not instruct your broker, bank or other
nominee to vote your shares, your shares will not be voted and
the effect will be the same as a vote AGAINST the
adoption of the Merger Agreement, but will not have an effect on
the proposal to adjourn the special meeting.
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Q.
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What do I do if I receive more than one proxy or set of
voting instructions?
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A.
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If you also hold shares directly as a record holder, in
street name, or otherwise through a nominee, you may
receive more than one proxy
and/or set
of voting instructions relating to the special meeting.
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These should each be voted
and/or
returned separately as described elsewhere in this proxy
statement in order to ensure that all of your shares are voted.
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Q. |
How does a participant in any of Anheuser-Buschs 401(k)
plans vote his or her shares of common stock held in such
plans?
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A. |
The trustee of each of Anheuser-Buschs 401(k) plans
(collectively, the 401(k) Plans) will vote a
participants shares of common stock according to the
participants instructions (subject to the trustees
fiduciary responsibilities under Section 404 of the
Employee Retirement Income Security Act of 1974, as amended, or
ERISA). To instruct the trustee on how to vote his or her
shares, a participant must follow the written instructions
accompanying this proxy statement that provide information on
how to vote the participants shares of common stock in the
401(k) Plans. If a participant fails to instruct the trustee on
how to vote his or her shares of common stock, the applicable
401(k) Plan fiduciary will provide instructions as to how those
shares should be voted.
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12
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Q.
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What is a quorum?
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A.
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A quorum of the holders of the outstanding shares of our common
stock must be present for the special meeting to be held. A
quorum is present if the holders of a majority of the
outstanding shares of our common stock entitled to vote are
present at the meeting, either in person or represented by
proxy. Abstentions and broker non-votes are counted as present
for the purpose of determining whether a quorum is present. A
broker non-vote occurs on an item when a broker is not permitted
to vote on that item without instructions from the beneficial
owner of the shares and no instructions are given.
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Q.
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What happens if I sell my shares before the special
meeting?
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A.
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The record date of the special meeting is earlier than the
special meeting and the date that the Merger is expected to be
completed. If you transfer your shares of common stock after the
record date but before the special meeting, you will retain your
right to vote at the special meeting, but will have transferred
the right to receive $70.00 per share in cash to be received by
our stockholders in the Merger. In order to receive the $70.00
per share, you must hold your shares through completion of the
Merger.
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Q.
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Am I entitled to exercise appraisal rights instead of
receiving the merger consideration for my shares?
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A.
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Yes. As a holder of our common stock, you are entitled to
appraisal rights under Delaware law in connection with the
Merger if you meet certain conditions. In order to perfect
appraisal rights, you must follow exactly the procedures
specified under Delaware law. See Dissenters Rights
of Appraisal beginning on page 78 and
Annex D to this proxy statement.
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Q.
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Will the Merger be taxable to me?
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A.
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The receipt of cash in exchange for your shares of common stock
pursuant to the Merger will be a taxable transaction to
U.S. stockholders for U.S. federal income tax
purposes, and may also be a taxable transaction under applicable
state, local or foreign income or other tax laws. Generally, for
U.S. federal income tax purposes, a U.S. stockholder
will recognize gain or loss equal to the difference between the
amount of cash received by that stockholder in the Merger and
that stockholders adjusted tax basis in the shares of
common stock exchanged for cash in the Merger. Because
individual circumstances may differ, we recommend that you
consult your own tax advisor to determine the particular tax
effects to you. See The Merger Material
U.S. Federal Income Tax Consequences of the Merger to Our
Stockholders beginning on page 52.
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Q.
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When is the Merger expected to be completed?
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A.
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We are working toward completing the Merger as quickly as
possible, and we anticipate that it will be completed by the end
of 2008, subject to the satisfaction or waiver of all closing
conditions. However, the exact timing of the completion of the
Merger cannot be predicted. In order to complete the Merger, we
must obtain stockholder approval and the other closing
conditions under the Merger Agreement must be satisfied or
waived. See The Merger Agreement Effective
Time and The Merger Agreement
Conditions to the Merger beginning on
pages 58 and 68 of this proxy statement,
respectively.
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Q.
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Will a proxy solicitor be used?
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A.
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Yes. Anheuser-Busch has engaged Morrow & Co., LLC to
assist in the solicitation of proxies for the special meeting
and Anheuser-Busch estimates it will pay Morrow & Co.,
LLC a fee of approximately $35,000. Anheuser-Busch has also
agreed to reimburse Morrow & Co., LLC for reasonable
out-of-pocket expenses incurred in connection with the proxy
solicitation and to indemnify Morrow & Co., LLC
against certain losses, costs and expenses.
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Q.
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Who can help answer any other questions that I have?
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A.
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If you have additional questions about the Merger, need
assistance in submitting your proxy or voting your shares of our
common stock, or need additional copies of the proxy statement
or the enclosed proxy card, please call Morrow & Co.,
LLC, our proxy solicitor, toll-free at
(800) 449-0910.
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13
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This proxy statement, and the documents to which we refer you in
this proxy statement, include forward-looking statements (as
that term is defined under Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation
Reform Act of 1995) based on estimates and assumptions.
There are forward-looking statements throughout this proxy
statement, including, without limitation, under the headings
Summary Term Sheet, Questions and Answers
about the Special Meeting and the Merger, The
Merger, Reasons for the Merger; Recommendation of
Our Board of Directors, Opinion of Goldman,
Sachs & Co., Opinion of Citigroup Global
Markets Inc., Projected Financial Information,
Regulatory Approvals, and Litigation Related
to the Merger, and in statements containing words such as
believes, estimates,
anticipates, continues,
contemplates, expects, may,
will, could, should or
would or other similar words or phrases. These
statements, which are based on information currently available
to us, are not guarantees of future performance and may involve
risks and uncertainties that could cause our actual growth,
results of operations, performance and business prospects, and
opportunities to materially differ from those expressed in, or
implied by, these statements. These forward-looking statements
speak only as of the date on which the statements were made and
we expressly disclaim any obligation to release publicly any
updates or revisions to any forward-looking statement included
in this proxy statement or elsewhere, except as required by
applicable securities laws. In addition to other factors and
matters contained or incorporated in this document, these
statements are subject to risks, uncertainties, and other
factors, including, among others:
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the occurrence of any event, change or other circumstances that
could give rise to the termination of the Merger Agreement;
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the effect of the announcement of the Merger on our business
relationships (including with employees and distributors),
operating results and business generally;
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the outcome of any legal proceedings that have been or may be
instituted against Anheuser-Busch and others relating to the
Merger Agreement;
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the failure of shareholders of InBev or stockholders of
Anheuser-Busch to approve the Merger;
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the timing (including possible delays) and receipt of regulatory
approvals from various governmental authorities (including any
conditions, limitations or restrictions placed on these
approvals) and the risk that one or more governmental
authorities may deny approvals of the Merger;
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the failure of InBev to obtain the necessary debt financing in
connection with the Merger;
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the failure of the Merger to close for any other reason;
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the outcome of pending or future litigation and governmental
proceedings;
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the amount of the costs, fees, expenses and charges related to
the Merger;
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adverse developments in general business, economic and political
conditions or any outbreak or escalation of hostilities on a
national, regional or international basis;
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our failure to comply with regulations and any changes in
regulations;
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the loss of any of our senior management;
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increased competitive pressures that may reduce revenues or
increase costs;
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changes in consumer tastes and preferences that could reduce
demand for the Anheuser-Busch products;
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increases in raw material and commodity prices could increase
operating costs;
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an inability to reduce costs could affect profitability;
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an increase in beer excise taxes or other taxes;
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the consolidation of retailers;
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14
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the loss of an important supplier;
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natural disasters, such as hurricanes, which may result in
shortages of raw materials and commodities and reduction in
tourism and attendance at the Anheuser-Busch theme parks; and
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unusual weather conditions which could affect domestic beer
consumption, attendance at the Anheuser-Busch theme parks, raw
material availability, or natural gas prices.
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15
THE
PARTIES TO THE MERGER
Anheuser-Busch
Anheuser-Busch Companies, Inc.
One Busch Place
St. Louis, Missouri 63118
(800) 342-5283
Anheuser-Busch Companies, Inc. is a Delaware corporation that
was organized in 1979 as the holding company of Anheuser-Busch,
Incorporated (ABI), a Missouri corporation whose
origins date back to 1875. ABI is the nations largest
brewer of beer and other malt beverages and produces and
distributes beer under many brand names, including Budweiser and
Bud Light. Anheuser-Busch holds a direct and indirect 50.2%
interest in Diblo S.A. de C.V. (the operating subsidiary of
Grupo Modelo, S.A.B. de C.V., Mexicos leading brewer of
beer, whose brand names include Corona and Negra Modelo).
Anheuser-Busch is also the parent corporation of a number of
subsidiaries that conduct various other business operations,
including one of the largest theme park operators in the United
States, a major manufacturer of aluminum cans and the largest
recycler of aluminum beverage containers in the United States.
Our common stock is listed on the New York Stock Exchange under
the symbol BUD.
InBev
InBev N.V./S.A.
Brouwerijplein, 1
3000 Leuven
Belgium
+32 16 27 61 11
InBev N.V./S.A. (InBev) is a public company
organized under the laws of Belgium with its principal executive
offices located at Brouwerijplein 1, 3000 Leuven, Belgium. InBev
manages a segmented portfolio of more than 200 brands. This
includes beers with global reach like Stella
Artois®
and
Becks®,
fast growing multicountry brands like
Leffe®
and
Hoegaarden®,
and many consumer-loved local champions like
Skol®,
Quilmes®,
Sibirskaya
Korona®,
Chernigivske®,
Sedrin®,
Cass®
and
Jupiler®.
InBev employs close to 89,000 people, running operations in
over 30 countries across the Americas, Europe and Asia Pacific.
In 2007, InBev realized 14.4 billion euro of revenue.
Merger Sub
Pestalozzi Acquisition Corp.
Brouwerijplein, 1
3000 Leuven
Belgium
+32 16 27 61 11
Pestalozzi Acquisition Corp., a Delaware corporation, is an
indirect wholly owned subsidiary of InBev. Merger Sub was formed
exclusively for the purpose of effecting the Merger.
16
THE
SPECIAL MEETING
Date,
Time, Place and Purpose of the Special Meeting
This proxy statement is being furnished to our stockholders as
part of the solicitation of proxies by our board of directors
for use at the special meeting to be held on November 12,
2008, at the Crowne Plaza Hotel & Exhibition Center
Meadowlands, located at Two Harmon Plaza, Secaucus, NJ starting
at noon Eastern Standard Time or at any postponement or
adjournment thereof. The purpose of the special meeting is for
our stockholders to consider and vote upon adoption of the
Merger Agreement (and to approve the adjournment of the special
meeting, if necessary or appropriate to solicit additional
proxies in favor of the proposal to adopt the Merger Agreement
if there are insufficient votes to adopt the Merger Agreement at
the time of the special meeting). Our stockholders must adopt
the Merger Agreement in order for the Merger to occur. If our
stockholders fail to adopt the Merger Agreement, the Merger will
not occur. A copy of the Merger Agreement is attached to this
proxy statement as Annex A. This proxy statement and the
enclosed form of proxy are first being mailed to our
stockholders on or about October 10, 2008.
Record
Date and Quorum
We have fixed the close of business on October 3, 2008 as
the record date for the special meeting, and only holders of
record of our common stock on the record date are entitled to
vote at the special meeting. On the record date, there were
723,069,216 shares of our common stock outstanding and
entitled to vote. Each share of our common stock entitles its
holder to one vote on all matters properly coming before the
special meeting.
A quorum of the holders of the outstanding shares of our common
stock must be present for the special meeting to be held. A
quorum is present if the holders of a majority of the
outstanding shares of our common stock entitled to vote are
present at the meeting, either in person or represented by
proxy. Abstentions and broker non-votes are counted as present
for the purpose of determining whether a quorum is present. A
broker non-vote occurs on an item when a broker is not permitted
to vote on that item without instructions from the beneficial
owner of the shares and no instructions are given. In the event
that a quorum is not present at the special meeting, it is
expected that the meeting will be adjourned or postponed to
solicit additional proxies.
Vote
Required for Approval
Adoption of the Merger Agreement requires the affirmative vote
of a majority of the shares of our common stock outstanding and
entitled to vote as of the record date. For the proposal to
adopt the Merger Agreement, you may vote FOR, AGAINST or
ABSTAIN. Abstentions are counted as present for the purpose
of determining whether a quorum is present, but will have the
same effect as a vote AGAINST the adoption of the
Merger Agreement.
Approval of any proposal to adjourn the special meeting, if
necessary or appropriate, to solicit additional proxies if there
are insufficient votes to approve the Merger Agreement at the
time of the special meeting requires the affirmative vote of the
votes cast that are entitled to vote at the special meeting,
assuming a quorum is present.
Under the rules of the NYSE, brokers who hold shares in street
name for customers have the authority to vote on
routine proposals when they have not received
instructions from beneficial owners. However, brokers are
precluded from exercising their voting discretion with respect
to approving non-routine matters such as the adoption of the
Merger Agreement and, as a result, absent specific instructions
from the beneficial owner of such shares, brokers are not
empowered to vote those shares, referred to generally as
broker non-votes. These broker
non-votes, if any, will be counted for purposes of
determining a quorum, but will have the same effect as a vote
AGAINST the adoption of the Merger Agreement.
As of August 31, 2008, the directors and executive officers
of Anheuser-Busch held and were entitled to vote, in the
aggregate, 31,552,284 shares of our common stock,
representing approximately 4.22% of the outstanding common
stock. Anheuser-Busch expects that its directors and executive
officers will vote all of their shares of common stock
FOR the adoption of the Merger Agreement.
17
Proxies
and Revocation
If you submit a proxy by telephone or the Internet or by
returning a signed proxy card by mail, your shares will be voted
at the special meeting as you indicate. If you sign your proxy
card without indicating your vote, your shares will be voted
FOR the adoption of the Merger Agreement and
FOR the adjournment of the special meeting, if
necessary or appropriate, to solicit additional proxies, and in
accordance with the best judgment of the individuals named in
the enclosed proxy card on any other matters properly brought
before the special meeting for a vote.
If your shares of common stock are held in street name, you will
receive instructions from your broker, bank or other nominee
that you must follow in order to have your shares voted. If you
do not instruct your broker to vote your shares, it has the same
effect as a vote against adoption of the Merger Agreement.
The trustee of each of the 401(k) Plans will vote a
participants shares of common stock according to the
participants instructions (subject to the trustees
fiduciary responsibilities under Section 404 of the
Employee Retirement Income Security Act of 1974, as amended, or
ERISA). To instruct the trustee on how to vote his or her
shares, a participant must follow the written instructions
accompanying this proxy statement that provide information on
how to vote the participants shares of common stock in the
401(k) Plans. If a participant fails to instruct the trustee on
how to vote his or her shares of common stock, the applicable
401(k) Plan fiduciary will provide instructions as to how those
shares should be voted.
Proxies received at any time before the special meeting, and not
revoked or superseded before being voted, will be voted at the
special meeting. You have the right to change or revoke your
proxy at any time before the vote taken at the special meeting:
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if you hold your shares in your name as a stockholder of record,
by written notice to our Vice President and Secretary, at One
Busch Place, St. Louis, Missouri 63118;
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by attending the special meeting and voting in person (your
attendance at the meeting will not, by itself, revoke your
proxy; you must vote in person at the meeting);
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by submitting a later-dated proxy card;
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if you voted by telephone or the Internet, by voting again by
telephone or Internet; or
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if you have instructed a broker, bank or other nominee to vote
your shares, by following the directions received from your
broker, bank or other nominee to change those instructions.
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Adjournments
and Postponements
Although it is not currently expected, the special meeting may
be adjourned or postponed to a later date or time, if necessary
or appropriate, to solicit additional proxies in the event there
are insufficient votes to adopt the Merger Agreement at the time
of such adjournment. Our amended and restated bylaws provide
that any adjournment may be made without prior notice if
announced at the meeting at which the adjournment is taken and
if the adjournment is to a date that is not greater than
30 days after the original date fixed for the special
meeting and no new record date is fixed for the adjourned
meeting. Any signed proxies received by us prior to noon,
Eastern Standard Time, on the date of the special meeting in
which no voting instructions are provided on such matter will be
voted FOR an adjournment of the special meeting to a
later date or time, if necessary or appropriate, to solicit
additional proxies in the event there are insufficient votes to
adopt the Merger Agreement at the time of such adjournment.
Whether or not a quorum exists, holders of a majority of our
shares of common stock present in person or represented by proxy
and entitled to vote at the special meeting may adjourn the
special meeting. Because a majority of the votes represented at
the special meeting, whether or not a quorum exists, is required
to approve the proposal to adjourn the meeting, abstentions will
have the same effect on such proposal as a vote
AGAINST the proposal. Any adjournment or
postponement of the special meeting for the purpose of
soliciting additional proxies will allow our stockholders who
have already sent in their proxies to revoke them at any time
prior to their use at the special meeting as adjourned or
postponed.
18
Rights of
Stockholders Who Object to the Merger
Stockholders are entitled to statutory appraisal rights under
Delaware law in connection with the Merger. This means that you
are entitled to have the value of your shares determined by the
Delaware Court of Chancery and to receive payment based on that
valuation. The ultimate amount you receive as a dissenting
stockholder in an appraisal proceeding may be more than, the
same as or less than the amount you would have received under
the Merger Agreement.
To exercise your appraisal rights, you must submit a written
demand for appraisal to Anheuser-Busch before the vote is taken
on the Merger Agreement and you must not vote in favor of the
adoption of the Merger Agreement. Your failure to follow exactly
the procedures specified under Delaware law will result in the
loss of your appraisal rights. See Dissenters Rights
of Appraisal beginning on page 78 of this proxy
statement and the text of the Delaware appraisal rights statute
reproduced in its entirety as Annex D.
Solicitation
of Proxies
This proxy solicitation is being made and paid for by
Anheuser-Busch on behalf of its board of directors. In addition,
we have retained Morrow & Co., LLC to assist in the
solicitation. We will pay Morrow & Co., LLC
approximately $35,000 plus a fee per phone call and reasonable
out-of-pocket expenses for its assistance. Our directors,
officers and employees may also solicit proxies by personal
interview, mail,
e-mail,
telephone, facsimile or other means of communication. These
persons will not be paid additional remuneration for their
efforts. We will also request brokers and other fiduciaries to
forward proxy solicitation material to the beneficial owners of
shares of our common stock that the brokers and fiduciaries hold
of record. Upon request, we will reimburse them for their
reasonable out-of-pocket expenses. In addition, we will
indemnify Morrow & Co., LLC against any losses arising
out of that firms proxy soliciting services on our behalf.
Questions
and Additional Information
If you have more questions about the Merger or how to submit
your proxy, or if you need additional copies of this proxy
statement or the enclosed proxy card or voting instructions,
please call Morrow & Co., LLC, our proxy solicitor,
toll-free at
(800) 449-0910.
19
THE
MERGER
Background
of the Merger
In pursuing its objective of enhancing stockholder value, the
Anheuser-Busch board of directors has from time to time
considered opportunities for a variety of transactions,
including potential business combinations and other strategic
alliances.
In November 2006, Anheuser-Busch and InBev entered into an
agreement pursuant to which Anheuser-Busch became the exclusive
U.S. importer of a number of InBevs European import
brands.
From time to time in 2007 and early 2008, there was market
speculation regarding a potential transaction between InBev and
Anheuser-Busch. During this time, no acquisition proposals were
made by InBev.
On May 23, 2008, a story appeared on the Financial Times
Alphaville website stating that InBev was
planning to make a proposal to acquire Anheuser-Busch for $65.00
per share in cash. Anheuser-Busch first learned of rumors that
InBev planned to make a proposal as a result of this story.
In May 2008, Goldman Sachs began working with Anheuser-Busch as
financial advisor in connection with the rumored InBev proposal.
On May 29, 2008, a meeting of the Anheuser-Busch board of
directors was convened to discuss the market rumors regarding a
potential proposal by InBev to acquire Anheuser-Busch. At this
meeting, representatives of Goldman Sachs discussed with the
board Goldman Sachs preliminary observations on
InBevs ability to finance a possible acquisition of
Anheuser-Busch and the financial aspects of InBevs rumored
proposal, and representatives of Skadden, Arps, Slate,
Meagher & Flom LLP (Skadden, Arps), legal
counsel to Anheuser-Busch, made a presentation to the board
regarding the directors fiduciary duties in reviewing a
possible proposal by InBev. During the meeting,
Anheuser-Buschs management reported to the board that it
was in the process of undertaking its annual update of
Anheuser-Buschs five-year strategic plan, including cost
reduction projections, and indicated that this process was
proceeding on a time frame consistent with the prior years
update schedule. The board discussed, among other things, the
possibility of a meeting between representatives of
Anheuser-Busch and InBev and recent discussions with a party
(referred to in the Background of the Merger as the
third party) in which Anheuser-Busch had a long-time
strategic interest regarding a possible transaction between
Anheuser-Busch and the third party.
On June 2, 2008, following an earlier inquiry by
representatives of Anheuser-Busch to representatives of InBev
regarding the market rumors about InBev making a proposal to
acquire Anheuser-Busch, representatives of Anheuser-Busch and
InBev met in Tampa, Florida. At this meeting, representatives of
InBev indicated to representatives of Anheuser-Busch that InBev
was interested in exploring a transaction with Anheuser-Busch,
but did not make any proposal to Anheuser-Busch.
In June 2008, Citi began working with Anheuser-Busch as
financial advisor in connection with the rumored InBev proposal.
On June 11, 2008, the board received a letter from InBev
which set forth the terms of InBevs non-binding proposal
to acquire Anheuser-Busch for $65.00 per share in cash. The
letter stated that InBevs proposal was conditioned on
InBevs completion of due diligence and the negotiation of
definitive transaction agreements. No financing commitments were
provided with the letter. Following receipt of InBevs
proposal, Anheuser-Busch issued a press release acknowledging
receipt of InBevs proposal and informing
Anheuser-Buschs stockholders of its intent to review
carefully the proposal in the context of all relevant factors,
including its long-term strategic plan, and to make a
determination in due course. InBev also issued a press release
setting forth the terms of its proposal.
Beginning on June 12, 2008, representatives of
Anheuser-Busch conducted discussions with the third party
regarding a potential strategic transaction. These discussions
continued between Anheuser-Busch, the third party and their
respective representatives through July 13, 2008, the date
of the announcement of the Merger.
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On June 13, 2008, a meeting of the board was convened in
order to update the board on InBevs proposal.
Representatives of Skadden, Arps reviewed with the directors
their fiduciary duties in analyzing InBevs proposal and
other strategic alternatives that Anheuser-Busch might have,
including a potential strategic transaction with the third party.
On June 15, 2008, InBev sent a letter to the Anheuser-Busch
board with the stated purpose of clarifying InBevs
proposal set forth in InBevs June 11th letter.
The letter indicated that InBevs proposal was based on the
current assets, business and capital structure of Anheuser-Busch
and stated that Anheuser-Busch should consider what InBev
described to be the potential adverse consequences
that any alternative to InBevs proposal could have on the
ability of Anheuser-Buschs stockholders to receive the
consideration contemplated by InBevs proposal.
On June 16, 2008, Anheuser-Busch issued a press release and
sent a response to InBev stating that the board: (i) was
evaluating InBevs proposal carefully and in the context of
all relevant factors, including Anheuser-Buschs long-term
strategic plan; (ii) would pursue the course of action that
was in the best interests of Anheuser-Buschs stockholders;
and (iii) expected to make its determination in due course.
On June 19, 2008, Mr. Carlos Fernandez, a director of
Anheuser-Busch and the chairman and chief executive officer of
Grupo Modelo, resigned from the Anheuser-Busch board of
directors. Mr. Fernandezs resignation did not impact
the boards consideration of strategic alternatives,
including its consideration of InBevs proposal and a
possible strategic transaction with the third party.
On June 20, 2008, Anheuser-Buschs board met to
consider and discuss InBevs proposal and
Anheuser-Buschs strategic alternatives. At this meeting,
Anheuser-Buschs management made a presentation to the
board regarding Anheuser-Buschs updated five-year
strategic plan, which included anticipated pricing increases and
plans to accelerate Anheuser-Buschs Blue Ocean
cost savings program, which management estimated would achieve
cumulative annual cost savings of approximately $1 billion
by 2010. Anheuser-Buschs management also discussed with
the board the potential benefits and risks associated with the
new plan as well as Anheuser-Buschs strategic
alternatives. Additionally, representatives of each of
Anheuser-Buschs principal financial advisors, Goldman
Sachs and Citi, reviewed with the board financial considerations
relating to InBevs proposal (including InBevs
ability to obtain financing) and Anheuser-Buschs strategic
alternatives, including Anheuser-Buschs standalone plan
and a potential strategic transaction with the third party.
Representatives of Skadden, Arps reviewed with the directors
their fiduciary duties. At this meeting, Anheuser-Buschs
non-management directors and outside directors also engaged in
further discussions in executive session, without the other
directors or management present, regarding the matters that had
been discussed by the entire board.
On June 25, 2008, InBev sent a letter to
Anheuser-Buschs board and issued a press release stating
that InBev had obtained financing commitments for the
transaction contemplated by InBevs proposal and that it
had paid $50 million in commitment fees to its lenders in
respect of such commitments. No financing commitments were
provided with the letter. The letter stated that InBevs
proposal was a firm proposal subject to negotiation
of definitive documentation and InBevs completion of due
diligence.
Also on June 25, 2008, Anheuser-Buschs board met to
continue its consideration of InBevs proposal. At this
meeting, Anheuser-Buschs management made presentations to
the board regarding InBevs proposal and
Anheuser-Buschs strategic alternatives, including
Anheuser-Buschs standalone plan and its ongoing
discussions with the third party. Additionally, representatives
of Goldman Sachs and Citi discussed with the board the financial
aspects of InBevs $65.00 per share proposal, including as
to inadequacy, from a financial point of view, of the $65.00 per
share proposal, were such proposal to become a definitive offer
containing all material terms and conditions. Representatives of
Skadden, Arps reviewed the terms of InBevs proposal with
the board and made a presentation to the directors describing
their fiduciary duties in considering InBevs proposal and
other possible Anheuser-Busch strategic alternatives. At the end
of this meeting, Anheuser-Buschs non-management directors
and outside directors each engaged in further discussions in
executive session, without the other directors or management
present, regarding the matters that had been discussed by the
entire board. At this meeting, the board also considered an
amendment to Anheuser-Buschs bylaws regarding the
determination of a record date for any stockholder action by
written consent. Following the
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board meeting on June 25, 2008, the outside directors of
the board engaged Simpson Thacher & Bartlett LLP
(Simpson Thacher) as legal counsel to the outside
directors.
On June 26, 2008, InBev filed suit in the Delaware Court of
Chancery seeking a declaratory judgment that the removal of all
Anheuser-Busch directors without cause by written consent is
valid pursuant to Anheuser-Buschs Restated Certificate of
Incorporation and Delaware law.
Also on June 26, 2008, Anheuser-Buschs board met to
further consider InBevs $65.00 per share proposal and to
discuss the status of Anheuser-Buschs ongoing discussions
with the third party. At this meeting, representatives of
Goldman Sachs and Citi again reviewed with the board the
financial aspects of InBevs $65.00 per share proposal,
including as to inadequacy, from a financial point of view, of
the $65.00 per share proposal, were such proposal to become a
definitive offer containing all material terms and conditions.
The board also received a report from Mr. Warner regarding
the views of the independent members of the board, including
that the independent members of the board had determined to
recommend that the board (i) reject InBevs proposal
as inadequate and not in the best interests of
Anheuser-Buschs stockholders and (ii) adopt the
proposed amendment to Anheuser-Buschs bylaws that had been
discussed by the board on June 25th. Representatives of
Skadden, Arps reviewed their presentation to the directors
regarding their fiduciary duties made at the previous days
board meeting. The representatives of Skadden, Arps also
reviewed with the directors the litigation filed by InBev.
Following these presentations and discussions, the board
unanimously concluded that InBevs proposal was inadequate
and not in the best interests of Anheuser-Buschs
stockholders. The board also approved a bylaw amendment that
clarified the procedure for setting a record date for consent
solicitations.
On June 26, 2008, Anheuser-Busch issued a press release and
sent a letter to InBev setting forth the boards
determination and stating, among other things, that
Anheuser-Busch would continue to consider any strategic
alternative that would be in the best interests of
Anheuser-Busch stockholders. The letter to InBev also indicated
that the board would be open to considering any proposal that
would provide full and certain value to Anheuser-Buschs
stockholders.
On June 27, 2008, Anheuser-Busch held an investor
teleconference during which it described its anticipated product
price increases and revised Blue Ocean plan.
On July 1, 2008, InBev issued a press release stating its
belief that its $65.00 per share proposal reflected the
full and fair value of Anheuser-Busch and was backed by fully
committed financing. The press release also stated InBevs
belief that its proposal provided immediate certainty to
Anheuser-Buschs stockholders.
Also on July 1, 2008, the board met to further consider
Anheuser-Buschs strategic alternatives, including its
ongoing discussions with the third party. At this meeting,
Anheuser-Busch management made a presentation to the board
regarding its ongoing discussions with the third party.
Representatives of Goldman Sachs and Citi discussed, on a
preliminary basis, certain financial considerations regarding a
potential strategic transaction with the third party, as well as
the potential financial impact of a potential strategic
transaction on InBevs proposal. Representatives of
Skadden, Arps also made a presentation to the directors
regarding their fiduciary duties in considering a potential
strategic transaction with the third party and InBevs
proposal. Following discussions among the entire board,
Anheuser-Buschs non-management directors and outside
directors each engaged in further discussions in executive
session, without the other directors or management present, and
with representatives of Skadden, Arps and Simpson Thacher. The
representatives of Skadden, Arps and Simpson Thacher responded
to questions from the outside directors regarding the matters
that had been discussed by the full board during its meeting.
On July 7, 2008, InBev filed a preliminary consent
solicitation statement with the SEC in connection with a
solicitation of Anheuser-Busch stockholder consent seeking to
(1) repeal any provision of Anheuser-Buschs bylaws in
effect at the time the consent solicitation becomes effective
that were not included in the amended and restated bylaws filed
with the SEC on June 26, 2008, (2) remove each member
of the Anheuser-Busch board at the time the consent solicitation
becomes effective and (3) elect certain individuals to
serve as directors of Anheuser-Busch.
Also on July 7, 2008, the board met to discuss further
Anheuser-Buschs strategic alternatives, including its
ongoing discussions with the third party. At the meeting,
Anheuser-Buschs management made a presentation with
respect to a potential transaction with the third party and the
strategic and financial implications of such a
22
transaction. Representatives of Skadden, Arps also made
presentations to the board regarding the status of
Anheuser-Buschs ongoing negotiations with the third party,
the terms of a potential strategic transaction and related legal
issues. Representatives of Skadden, Arps also discussed with the
directors the preliminary consent solicitation statement filed
by InBev. Following these presentations and discussions,
representatives of Goldman Sachs and Citi reviewed with the
board their observations concerning the financial aspects of a
potential strategic transaction with the third party, including
regarding the financial aspects of a potential strategic
transaction on any transaction with InBev. Representatives of
Skadden, Arps and Simpson Thacher then made presentations to the
directors regarding, and discussed with the directors, the
directors fiduciary duties under Delaware law in
connection with a potential strategic transaction with the third
party and a potential transaction with InBev. Following
discussions among the entire board, Anheuser-Buschs
non-management directors and outside directors each engaged in
further discussions in executive session, without the other
directors or management. These discussions included the risks
and benefits of a potential transaction with the third party as
compared to a sale of Anheuser-Busch to InBev. The board also
recognized that the passage of time could jeopardize the
negotiations relating to the potential strategic transaction
with the third party. After the entire board reconvened, the
board authorized Mr. Busch IV, and two outside directors,
Messrs. Warner and Whitacre, to advise InBev that the board was
close to making a decision regarding other strategic
alternatives and that InBev should at that time make its best
proposal to acquire Anheuser-Busch. The board also authorized
Goldman Sachs to contact InBevs financial advisors to
discuss such a proposal.
On July 8, 2008, Messrs. Busch IV, Warner and Whitacre
contacted representatives of InBev and reported to InBev that,
as previously indicated, Anheuser-Buschs board remained
open to considering any proposal that offered full and certain
value to Anheuser-Buschs stockholders. The Anheuser-Busch
representatives advised InBev that the board was close to making
a decision regarding other strategic alternatives and that if
InBev was interested in pursuing a transaction with
Anheuser-Busch, InBev should, prior to the boards
scheduled meeting on July 9, 2008, submit its best proposal
for an acquisition of Anheuser-Busch. Following this discussion,
representatives of Goldman Sachs and representatives of Lazard
Freres and J.P. Morgan Securities Inc., InBevs
financial advisors, met to further discuss a possible
transaction. At this meeting, representatives of Goldman Sachs
stated that InBevs revised proposal should be its best and
final proposal. Each of Messrs. Busch IV, Warner and
Whitacre and the representatives of Goldman Sachs stressed that
any proposal made by InBev would need to provide Anheuser-Busch
with a high degree of certainty as to closing.
Also on July 8, 2008, InBev sent (1) a letter to
Anheuser-Busch requesting that the board set a record date for
InBevs consent solicitation pursuant to the terms of
Anheuser-Buschs bylaws and (2) a letter to
Anheuser-Busch seeking a list of Anheuser-Buschs
stockholders and other materials.
On July 9, 2008, Anheuser-Busch filed a preliminary consent
revocation statement in response to InBevs consent
solicitation statement.
Also on July 9, 2008, representatives of InBev reported to
Messrs. Busch IV and Warner and representatives from
Goldman Sachs that InBev was prepared to propose an acquisition
of Anheuser-Busch at a price of $70.00 in cash for each share of
Anheuser-Busch common stock, that such a proposal would be
subject to limited conditions to consummating a transaction (and
would not include a financing condition), and that such price
represented, as requested by the Anheuser-Busch representatives,
InBevs best and final proposal. InBevs
representatives also indicated that InBev could complete its
confirmatory due diligence very quickly, and that it was close
to finalizing definitive loan agreements with its lenders.
Later on July 9, 2008, the Anheuser-Busch board met to be
updated on the discussions between Messrs. Busch IV, Warner
and Whitacre and representatives of Goldman Sachs, on the one
hand, and various representatives of InBev, on the other hand.
At the meeting, Messrs. Warner and Busch IV reported
to the board that InBev had proposed a price of $70.00 in cash
per share of Anheuser-Busch common stock, with limited
conditions to closing and that the InBev representatives had
described the proposed price as its best and final proposal.
Representatives of Goldman Sachs and Citi reviewed the financial
aspects of the $70.00 cash per share proposal. Representatives
of Skadden, Arps discussed with the board significant issues
that would need to be negotiated with InBev. Following
discussion regarding InBevs revised proposal, including
the proposed price and other terms, the board authorized
Anheuser-Buschs management, Goldman Sachs and Skadden,
Arps to continue to explore whether a mutually acceptable
transaction could be reached on the terms
23
proposed by InBev. The board discussed the possibility of making
a counter-proposal to InBev, but determined that doing so at
that time could jeopardize the potential basis on which to move
forward on discussions with InBev. The board noted that any
potential negotiated transaction would need to have a high
degree of certainty of closing and provide that its consummation
was not conditioned on InBevs financing.
On July 10, 2008, Anheuser-Busch and InBev entered into a
confidentiality agreement and thereafter, until July 13,
2008, InBevs representatives conducted a confirmatory due
diligence review of Anheuser-Buschs business.
Additionally, during an initial meeting between representatives
of Anheuser-Busch and InBev on July 10, 2008, InBevs
representatives reported that InBev intended to enter into
definitive loan agreements to borrow $51.6 billion in the
near future, and prior to entering into a merger agreement with
Anheuser-Busch.
Also on July 10, 2008, Sullivan & Cromwell LLP,
legal counsel to InBev (Sullivan &
Cromwell), delivered a draft merger agreement and
financing commitment letters to Skadden, Arps. The draft merger
agreement contained a proposed termination fee equal to 3.5% of
the transaction value plus the reimbursement of up to
$50 million of InBevs out-of-pocket expenses and full
reimbursement of InBevs financing expenses.
Representatives of Skadden, Arps also requested on behalf of
Anheuser-Busch that InBev seek to obtain a voting agreement from
InBevs controlling shareholder, Stichting InBev AK (which
holds voting power, or has the right to direct the voting of
certain affiliated parties acting in concert, of approximately
63.47% of InBevs outstanding common stock) to vote at an
extraordinary shareholders meeting of InBev in favor of,
among other things, InBevs acquisition of Anheuser-Busch.
On July 11, 2008, Skadden, Arps delivered a revised draft
merger agreement to Sullivan & Cromwell and InBev
delivered a draft voting agreement that had been proposed by
counsel to Stichting InBev AK. The revised draft merger
agreement proposed that the termination fee be equal to 1% of
transaction equity value, with no separate reimbursement of
expenses. Thereafter, on July 11, 12 and 13, 2008,
Anheuser-Busch, InBev and their respective representatives
engaged in negotiations of the terms of the Merger Agreement and
voting agreement. During these negotiations, representatives of
InBev indicated that InBev was prepared to commence a tender
offer to acquire Anheuser-Busch at a price of less than $70.00
per share if the parties could not reach an agreement.
Throughout these negotiations, Anheuser-Busch continued to
emphasize the primary importance of certainty of closing if an
agreement were reached. Anheuser-Busch was also able to
negotiate an increase in its quarterly cash dividend from $0.33
to $0.37 per share payable prior to the closing of the Merger.
The parties also engaged in further negotiations regarding the
termination fee, and following a counterproposal by InBev that
the termination fee be equal to 3% of transaction equity value,
the parties agreed to a termination fee of $1.25 billion,
with no separate reimbursement of expenses. In addition, InBev
and Anheuser-Busch also discussed and agreed on various employee
retention and community focused issues that both InBev and
Anheuser-Busch considered to be important to a successful
transition of ownership of Anheuser-Busch to InBev. During this
period, Mr. Busch IV and InBev began discussions
regarding a potential consulting agreement between
Mr. Busch IV and InBev to be effective in the event
that an acquisition of Anheuser-Busch by InBev were consummated.
On July 12, 2008, InBev executed definitive loan agreements
with respect to debt and bridge financing to fund the
transactions being negotiated.
On the afternoon of July 13, 2008, the board of directors
of Anheuser-Busch met and reviewed the terms and conditions of
the proposed Merger. At the meeting, representatives from
Skadden, Arps reviewed with the board of directors the proposed
terms of the Merger Agreement and voting agreement, and the
fiduciary duties of the board. Representatives of Goldman Sachs
and Citi made presentations with respect to the financial
aspects of the $70.00 per share price proposal by InBev.
Anheuser-Busch management discussed with the directors its plans
to implement Anheuser-Buschs Blue Ocean plan,
its pricing initiatives and the financial communitys
reaction to the updated strategic plan. The directors discussed
with Anheuser-Buschs management, financial advisors and
outside legal counsel the InBev proposal, potential execution
risks associated with the potential strategic transaction with
the third party, the effects of the economy on Anheuser-Busch,
the effects of Anheuser-Buschs pricing initiatives on its
projected volume growth and other potential risks associated
with the updated strategic plan. Following further discussions
among the entire board, Anheuser-Buschs non-management
directors and outside directors each engaged in further
discussions in executive session, without the other directors or
management present, and directed
24
questions to representatives of Skadden, Arps and Simpson
Thacher, as well as to Anheuser-Buschs financial advisors,
Goldman Sachs and Citi.
During these discussions, representatives of Goldman Sachs and
Citi rendered to the entire Anheuser-Busch board their
respective oral opinions, which were subsequently confirmed by
delivery of written opinions, each dated July 13, 2008, to
the effect that, as of that date, and based on and subject to
the various assumptions made, matters considered and limitations
described in each of the opinions, the merger consideration to
be paid to holders (in the case of Goldman Sachs opinion,
other than InBev and its direct and indirect wholly owned
subsidiaries) of Anheuser-Busch common stock in the Merger was
fair, from a financial point of view, to such holders. Such
opinions are attached to this proxy statement as Annex B
and Annex C, respectively.
The board again discussed the possibility of making a
counter-proposal to InBev, but determined that the $70.00 per
share was likely the best price available in light of
(i) Anheuser-Buschs previous request for InBevs
best and final proposal, (ii) statements from senior
representatives of InBev, including representatives of
InBevs controlling shareholders, that the $70.00 per share
was InBevs best and final proposal and (iii) the
boards view that $70.00 per share was a fair price for
Anheuser-Busch. The board also considered that requesting a
higher offer from InBev could jeopardize progress that had been
made in the negotiations and Anheuser-Buschs negotiating
position if the request was rejected, result in the withdrawal
of InBevs proposal at a price of $70.00 per share
and/or
result in adverse changes to other terms of the proposed
transaction, including an increase in the conditionality of, and
reduction in the likelihood of consummating, the contemplated
transaction with InBev.
Following careful consideration of the proposed Merger Agreement
and the Merger, and including the facts and circumstances
regarding the alternatives available to Anheuser-Busch, the
board of directors unanimously determined that the Merger
Agreement and the transactions contemplated thereby, including
the Merger, are advisable and fair to, and in the best interests
of, Anheuser-Busch and its stockholders, approved the Merger
Agreement and the Merger and resolved to recommend that
Anheuser-Busch stockholders vote in favor of the adoption of the
Merger Agreement.
Also on July 13, 2008, the InBev board of directors
approved the Merger Agreement and the transactions contemplated
thereby, including the Merger.
Over the course of the afternoon and evening of July 13,
2008, representatives of Skadden, Arps and Sullivan &
Cromwell finalized the Merger Agreement and other related
documents, including the voting agreement with Stichting InBev
AK.
The parties executed the Merger Agreement and voting agreement
on July 13, 2008 and issued a joint press release
announcing the transaction.
Reasons
for the Merger; Recommendation of Our Board of
Directors
Our board of directors, acting with the advice and assistance of
its financial advisors and outside legal counsel and
Anheuser-Buschs management, carefully evaluated the Merger
Agreement and the transactions contemplated thereby. Our board
of directors determined that the Merger Agreement and the
transactions contemplated thereby, including the proposed
Merger, are advisable and fair to, and in the best interests of
Anheuser-Busch and its stockholders. At a meeting of our board
of directors held on July 13, 2008, our board of directors
unanimously resolved to approve the Merger Agreement and the
transactions contemplated thereby, including the proposed
Merger, and to recommend to the stockholders of Anheuser-Busch
that they vote for the adoption of the Merger Agreement.
In the course of reaching its recommendation, our board of
directors consulted with Anheuser-Buschs management and
its financial advisors and outside legal counsel and considered
a number of substantive factors, both positive and negative, and
potential benefits and detriments of the Merger. Our board of
directors believed that, taken as a whole, the following factors
supported its decision to approve the proposed Merger:
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Consideration; Historical Market Prices. Our
board of directors considered the historical market prices of
Anheuser-Buschs common stock and noted that the proposed
Merger consideration of $70.00 per share of common stock
exceeded, by approximately 27%, the previous all time high
closing price
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of Anheuser-Buschs common stock of $54.97 on
October 21, 2002. Our board of directors also noted the
fact that the Merger consideration was all cash, which provides
certainty of value to Anheuser-Buschs stockholders, and
represented a premium of (i) approximately 33% over the
closing price of Anheuser-Buschs common stock on
May 22, 2008 (the date prior to widespread market
speculation about InBevs initial $65.00 per share
proposal), (ii) approximately 39% over the one-month
average closing price of Anheuser-Buschs common stock
prior to May 22, 2008 and (iii) approximately 29% over
the 52-week high price prior to May 22, 2008. Our board of
directors also noted that the $70.00 per share merger
consideration represented an increase of 7.7% over InBevs
June 11, 2008 proposal of $65.00 per share. Our board of
directors also recognized that in view of the recent declines in
the prices of equity securities in the stock markets, including
broad market indices, the $70.00 price proposed by InBev might
represent an even greater premium to a current unaffected share
price for Anheuser-Busch.
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Financial Advisors Opinions. Our board
of directors considered the financial presentations of Goldman
Sachs and Citi and their oral opinions delivered to our board of
directors (which opinions were subsequently confirmed in
writing) to the effect that, as of the date of the opinions and
based upon and subject to the various assumptions made, matters
considered and limitations described in each of the opinions,
the merger consideration of $70.00 per share of common stock in
cash was fair, from a financial point of view, to
Anheuser-Buschs common stockholders (in the case of
Goldman Sachs opinion, other than InBev and its direct and
indirectly owned subsidiaries), as more fully described under
Opinion of Goldman, Sachs & Co. beginning
on page 30 and Opinion of Citigroup Global
Markets Inc. beginning on page 37. The full text of
each written opinion, dated July 13, 2008, which sets forth
the assumptions made, procedures followed, matters considered
and limitations on the review undertaken in connection with such
opinion by Goldman Sachs and Citi, respectively, is attached as
Annex B and C, respectively, to this proxy statement and
each is incorporated herein by reference. You are urged to, and
should, read each of the fairness opinions carefully.
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Strategic Alternatives and Uncertainty of Future Common Stock
Market Price. Our board of directors considered
their familiarity with Anheuser-Buschs business, financial
condition, results of operations, intellectual property,
marketing prowess, management and competitive position and
prospects of Anheuser-Busch, as well as current industry,
economic and stock and credit market conditions. Our board of
directors also considered certain strategic alternatives to the
Merger, as well as the possibility of remaining as a standalone
public company. In that regard, our board of directors
considered Anheuser-Buschs updated strategic plan and
initiatives, including the enhanced Blue Ocean plan
and the potential execution risks associated with such plan, the
effects of the economy on Anheuser-Busch and the effects of
Anheuser-Buschs pricing initiatives on its projected
volume growth. Our board of directors also considered the
benefits and potential risks, including execution risks, of
pursuing possible strategic alternatives, including a potential
strategic transaction with a third party. In connection with
these considerations, our board of directors considered the
attendant risk that, if Anheuser-Busch did not enter into the
Merger Agreement with InBev, the price that might be received by
Anheuser-Buschs stockholders selling shares of
Anheuser-Busch common stock in the open market could be less
than the $70.00 per share cash price proposed to be paid in the
Merger, especially in light of recent negative trends in the
stock market.
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Ability to Consider Alternative Transactions and to Terminate
the Merger Agreement. Our board of directors
noted that, although the Merger Agreement contains customary
provisions prohibiting Anheuser-Busch from soliciting an
alternate takeover proposal from a third party or entering into
negotiations or discussions regarding an acquisition
proposal, if our board of directors determines in good
faith (after consultation with its financial advisors and
outside legal counsel) that such acquisition proposal would
involve a transaction more favorable for Anheuser-Buschs
stockholders from a financial point of view, our board of
directors is entitled to cause payment of the termination fee
discussed below, terminate the Merger Agreement and accept the
superior acquisition proposal.
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Ability to Change Recommendation to
Stockholders. Our board of directors noted that
the Merger Agreement retains our boards ability to change,
qualify, withhold, withdraw or modify its recommendation to
Anheuser-Buschs stockholders if, upon the advice of
Anheuser-Buschs financial advisors and
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outside legal counsel, it determines that a failure to do so
would be inconsistent with our boards fiduciary duties to
Anheuser-Buschs stockholders. Our board also noted that
the exercise of this right would give InBev the right to
terminate the Merger Agreement and require Anheuser-Busch to pay
a termination fee to InBev.
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Absence of Competing Offers; Fiduciary
Out. Our board of directors considered the fact
that Anheuser-Busch engaged in negotiations with InBev without
seeking offers from other potential strategic or financial
purchasers prior to entering into the Merger Agreement. In that
regard, our board noted that the speculation concerning
InBevs initial $65.00 per share proposal had been public
since May 23, 2008 and the delivery of its $65.00 per share
proposal had been public since June 11, 2008, that no third
party had made any inquiry about acquiring Anheuser-Busch since
those dates, and that, in the boards judgment, it was
unlikely that any strategic purchaser would make a higher offer
for Anheuser-Busch. In addition, our board of directors noted
that in view of the difficult credit environment and the size of
the transaction, it was unlikely that a non-strategic buyer
would be in a position to propose a transaction with more
attractive terms (both in terms of value and certainty of
closing) than the proposed Merger. Our board of directors noted
that, in the event that any third party were to seek to make
such a proposal, our board retained the ability to consider
unsolicited proposals after the execution of the Merger
Agreement and to enter into an agreement with respect to an
acquisition proposal under certain circumstances (concurrently
with terminating the Merger Agreement and paying a termination
fee to InBev).
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Negotiations Regarding the Merger
Consideration. Our board of directors noted that
the substantive price negotiations with InBev were led by two of
Anheuser-Buschs outside directors, Messrs. Warner and
Whitacre, along with Anheuser-Buschs President and Chief
Executive Officer, Mr. Busch IV. The board authorized
Mr. Warner and Mr. Whitacre to participate in
negotiations with InBev in light of their positions as outside
directors and their experience negotiating similar transactions.
The board determined that, given Mr. Busch IVs
in-depth understanding of Anheuser-Busch and prior contact with
the InBev representatives, and his leadership position as CEO of
Anheuser-Busch, it would be advantageous for him to participate
in the negotiations.
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Termination Fee. Our board of directors
considered the $1.25 billion termination fee, which
represents approximately 2.4% of the aggregate merger
consideration, to be paid to InBev if the Merger Agreement is
terminated under certain circumstances specified in the Merger
Agreement. Our board of directors was apprised by its financial
advisors and outside legal counsel of the customary nature of
the existence and size of a termination fee in transactions
similar to the Merger. Accordingly, our board of directors
believed that a termination fee of this size for the
transactions contemplated by the Merger Agreement should not
unduly deter a third party from making, or inhibit our board of
directors in evaluating, negotiating, and, if appropriate,
terminating the Merger Agreement to enter into a transaction
that is, a superior proposal.
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Terms of the Merger Agreement. Our board of
directors considered the terms and conditions of the Merger
Agreement, including the fact that the completion of the
proposed Merger is not subject to any financing condition and
that there are relatively few closing conditions to the Merger.
Our board of directors noted that, to the extent required or
requested to do so in order to obtain clearance of the Merger
from a governmental entity, InBev will be required, under the
terms of the Merger Agreement, to divest or hold separate or
agree to restrictions on certain of its assets or businesses,
provided such divestitures or other arrangements would not,
individually or in the aggregate, result in a net reduction of
assets, categories of assets, businesses or investments that
generated in the aggregate more than 5% of the sum of the
2007 gross sales and investment income of InBev and
Anheuser-Busch, including their respective subsidiaries, on a
combined basis. Additionally, our board of directors considered
that the Merger Agreement permitted Anheuser-Busch to pay its
stockholders quarterly dividends during the period between
signing and closing at an increased rate of up to $0.37 per
share (compared to the prior quarterly rate of $0.33 per share).
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27
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Likelihood of Consummation. Our board of
directors considered the likelihood that the Merger will be
completed, including its belief that there would not be
significant antitrust or other regulatory impediments to the
transaction. Our board of directors noted that the receipt of
third party consents (including any consent or approval of Grupo
Modelo S.A.B. de C.V. under any of our (or our subsidiaries)
agreements with Grupo Modelo S.A.B. de C.V. or its subsidiaries
(Grupo Modelo)) was not a condition to the
completion of the Merger. Our board of directors also considered
the fact that InBev needed to obtain shareholder approval for
the transaction and that the controlling shareholder of InBev
(holding voting power of, or having the right to direct the
voting by certain affiliated parties or parties acting in
concert of, in the aggregate, voting power of approximately
63.47% of InBevs outstanding common stock) was providing
Anheuser-Busch with a voting agreement pursuant to which such
stockholder has agreed, among other things, to vote at an
extraordinary shareholders meeting of InBev in favor of,
among other things, InBevs acquisition of Anheuser-Busch
and that, given such voting agreement and InBevs
historical voting patterns, such approval was highly likely to
be obtained. In addition, InBev agreed to pay Anheuser-Busch a
$1.25 billion termination fee if a favorable vote of its
shareholders was not obtained.
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Financing by InBev. Our board of directors
also noted that InBev had entered into definitive financing
agreements from a syndicate of banks and that the Merger
Agreement provided that the failure of InBev to have sufficient
financing would be a breach of the Merger Agreement by InBev.
Our board of directors also noted that the Merger Agreement
provided that in the event of a breach by InBev Anheuser-Busch
would be entitled to specific performance of the Merger
Agreement or monetary damages, including damages on behalf of
Anheuser-Buschs stockholders for their economic loss.
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Consent Solicitation. Our board of directors
was aware of the consent solicitation process which was being
undertaken by InBev to seek to remove all of the existing
members of Anheuser-Buschs board of directors and replace
them with a slate of nominees selected by InBev. Our board of
directors noted that if InBevs slate of directors were
elected to our board of directors, such nominees might not take
action to create or maximize value for Anheuser-Buschs
stockholders, including conducting vigorous negotiations with
InBev or diligently pursuing other attractive strategic
alternatives. Our board of directors also noted the status of
the pending litigation between InBev and Anheuser-Busch relating
to InBevs ability to remove without cause all of
Anheuser-Buschs directors. Our board of directors also
considered the possible detrimental effects on Anheuser-Busch
and its relationships with various constituencies in the event
of a protracted, contentious and highly public consent
solicitation. Our board of directors also was aware that,
following the market speculation about an acquisition proposal
by InBev in late May 2008, a relatively large percentage of
Anheuser-Busch shares had been traded in the market and that
Anheuser-Buschs proxy solicitor believed that arbitrageurs
and other short-term or event-driven investors now owned a
meaningful percentage of Anheuser-Buschs shares.
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Possible Unsolicited Tender Offer. Our board
of directors also noted the possibility that InBev, upon
entering into definitive financing agreements, could commence
within a short period of time an unsolicited tender offer
without a financing condition, and that it was possible that
such tender offer would be at a price of less than $70.00 per
share.
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Stockholder Vote. Our board of directors
considered the fact that the consummation of the proposed Merger
would require the affirmative vote of the holders of a majority
of the outstanding shares of Anheuser-Buschs common stock
entitled to vote. Our board of directors noted that shares owned
by members of the Busch family and other members of management
represented a relatively small percentage of the outstanding
shares and that, accordingly, the Merger Agreement would, in
effect, need to be approved by a majority of the shares held by
Anheuser-Buschs public stockholders.
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Identity of the Buyer. Our board of directors
considered the fact that InBev is a well known, large
international brewing company with experience in acquiring and
running companies in the beer industry. In addition,
Anheuser-Busch is familiar with InBev as the two companies have
had an ongoing commercial relationship based on several
successful arrangements in the U.S., Canada and South Korea.
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28
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Availability of Dissenters Rights. Our
board of directors considered the fact that dissenters
rights of appraisal would be available to Anheuser-Buschs
stockholders under Delaware law and that there was no condition
in the Merger Agreement relating to the number of shares of
common stock that could dissent from the Merger.
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Our board of directors also considered potential risks or
negative factors relating to the Merger, including the following:
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Future Growth. Our board of directors
considered the fact that if the proposed Merger is approved and
adopted, Anheuser-Busch will no longer exist as an independent
public company, and Anheuser-Buschs stockholders will no
longer participate in the future growth of Anheuser-Busch. Our
board of directors concluded that providing
Anheuser-Buschs stockholders the opportunity to receive
the proposed $70.00 per share merger consideration would be more
favorable to Anheuser-Buschs stockholders than remaining
as stockholders in an independent public company with the
potential for future gain, since these gains would be subject to
risks related to Anheuser-Buschs future performance,
including potential execution risk associated with
Anheuser-Buschs Blue Ocean plan, the effects
of the economy on Anheuser-Busch, the effects of
Anheuser-Buschs pricing initiatives on its projected
volume growth and other potential risks associated with the
updated strategic plans and initiatives, including a potential
strategic transaction with a third party that had been carefully
considered by the board.
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Risk of Non-Completion. Our board of directors
considered the risk that the proposed Merger might not be
completed and the effect of the resulting public announcement of
termination of the Merger Agreement on:
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The market price of Anheuser-Buschs common
stock. In that regard, the market price could be
affected by many factors, including (1) the reason or
reasons for which the Merger Agreement was terminated and
whether such termination resulted from factors adversely
affecting Anheuser-Busch; (2) the possibility that, as a
result of the termination of the Merger Agreement, the
marketplace would consider Anheuser-Busch to be an unattractive
acquisition candidate; (3) the possible sale of shares of
Anheuser-Buschs common stock by short-term investors
following an announcement of termination of the Merger
Agreement; and (4) the ability of Anheuser-Busch to execute
on its Blue Ocean plan, its pricing initiatives and
its other strategic plans and initiatives; and
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Anheuser-Buschs ability to attract and retain key
personnel.
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Possible Disruption of the Business. Our board
of directors considered the possible disruption to
Anheuser-Buschs business that may result from the
announcement of the transaction and the resulting distraction of
the attention of Anheuser-Buschs management and employees
and the impact of the transaction on Anheuser-Buschs
wholesalers, distributors, joint venture partners and other
constituencies. Our board of directors also considered the fact
that the Merger Agreement contains certain limitations regarding
the operation of Anheuser-Busch during the period between the
signing of the Merger Agreement and the completion of the
proposed Merger. See The Merger Agreement
Covenants; Conduct of the Business Prior to Closing
beginning on page 62. Our board of directors believed such
limitations were customary for merger transactions involving
public companies, and appropriately tailored to the specific
requirements of the operation of Anheuser-Buschs business.
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Merger Consideration Taxable. Our board of
directors considered that the cash consideration to be received
by Anheuser-Buschs stockholders would be taxable to the
stockholders. In that regard, our board of directors also noted
that capital gains rates are at recent historical low levels and
such rates could be raised in the future.
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Our board of directors concluded that the potentially negative
factors associated with the proposed Merger were outweighed by
the opportunity for Anheuser-Buschs stockholders to
realize a significant premium on the value of their common stock
and monetize their investment in Anheuser-Busch for the $70.00
per share cash merger consideration. Our board of directors
believed that the proposed Merger would maximize the immediate
value of the stockholders shares and eliminate the
unavoidable risks and uncertainty affecting the
29
future prospects of Anheuser-Busch, including the potential
execution risks associated with Anheuser-Buschs Blue
Ocean plan, its pricing initiatives and its other
strategic plans and initiatives, including a potential strategic
transaction between Anheuser-Busch and a third party that had
been carefully considered by the board. Accordingly, our board
of directors concluded that the proposed Merger was in the best
interest of stockholders.
In addition, our board of directors was aware of and considered
the interests that our directors and executive officers may have
with respect to the Merger that differ from, or are in addition
to, their interests as stockholders of Anheuser-Busch generally,
as described in The Merger Interests of
Anheuser-Buschs Directors and Executive Officers in the
Merger beginning on page 44 of this proxy statement,
which our board of directors considered as being neutral in its
evaluation of the Merger.
The foregoing discussion summarizes the material information and
factors considered by our board of directors in its
consideration of the proposed Merger. Our board of directors
collectively reached the unanimous decision to approve the
Merger Agreement and related transactions in light of the
factors described above and other factors that each member of
our board of directors felt were appropriate. In view of the
variety of factors and the quality and amount of information
considered, our board of directors did not find it practicable
to, and did not make specific assessments of, quantify or
otherwise assign relative weights to the specific factors
considered in reaching its determination. Individual members of
our board of directors may have given different weight to
different factors.
Our board of directors recommends that you vote
FOR the adoption of the Merger Agreement and
FOR the adjournment or postponement of the special
meeting, if necessary or appropriate, to solicit additional
proxies in favor of the proposal to adopt the Merger Agreement
if there are insufficient votes to adopt the Merger Agreement at
the time of the special meeting.
Opinion
of Goldman, Sachs & Co.
Goldman Sachs rendered its opinion to Anheuser-Buschs
board of directors that, as of July 13, 2008 and based upon
and subject to the factors and assumptions set forth therein,
the merger consideration of $70.00 per share of Anheuser-Busch
common stock in cash to be received by the holders (other than
InBev and its direct and indirectly owned subsidiaries) of
shares of our common stock pursuant to the Merger Agreement was
fair from a financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated
July 13, 2008, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as
Annex B to this proxy statement and is incorporated herein
by reference. Goldman Sachs provided its advisory services and
its opinion for the information and assistance of
Anheuser-Buschs board of directors in connection with its
consideration of the Merger. The Goldman Sachs opinion is not a
recommendation as to how any holder of shares of Anheuser-Busch
common stock should vote with respect to the Merger or any other
matter.
In connection with rendering the opinion described above and
performing its related financial analyses, Goldman Sachs
reviewed, among other things:
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the Merger Agreement;
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annual reports to stockholders and Annual Reports on
Form 10-K
of Anheuser-Busch for the three fiscal years ended
December 31, 2007;
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certain interim reports to stockholders and Quarterly Reports on
Form 10-Q
of Anheuser-Busch;
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certain other communications from Anheuser-Busch and InBev to
the stockholders of Anheuser-Busch;
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certain publicly available research analyst reports for
Anheuser-Busch; and
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certain internal financial analyses and forecasts for
Anheuser-Busch prepared by its management and approved for
Goldman Sachs use by Anheuser-Busch (described in this
section as the Forecasts).
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30
Goldman Sachs also held discussions with senior management and
the board of directors of Anheuser-Busch regarding their
assessment of the past and current business operations,
financial condition and future prospects of Anheuser-Busch,
including their views on the risks and uncertainties associated
with achieving the Forecasts. In addition, Goldman Sachs
reviewed the reported price and trading activity for the shares
of Anheuser-Busch common stock, compared certain financial and
stock market information for Anheuser-Busch with similar
information for certain other companies the securities of which
are publicly traded, reviewed the financial terms of certain
recent business combinations in the beverage industry
specifically and in other industries generally and performed
such other studies and analyses, and considered such other
factors, as it considered appropriate.
For purposes of rendering the opinion described above, Goldman
Sachs relied upon and assumed, without assuming any
responsibility for independent verification, the accuracy and
completeness of all of the financial, legal, regulatory, tax,
accounting and other information provided to, discussed with or
reviewed by it. In addition, Goldman Sachs did not make an
independent evaluation or appraisal of the assets and
liabilities (including any contingent, derivative or
off-balance-sheet assets and liabilities) of Anheuser-Busch or
any of its subsidiaries, nor was Goldman Sachs furnished with
any such evaluation or appraisal. Goldman Sachs opinion
does not address any legal, regulatory, tax or accounting
matters nor does it address the underlying business decision of
Anheuser-Busch to engage in the Merger, or the relative merits
of the Merger as compared to any strategic alternatives that may
be available to Anheuser-Busch. Goldman Sachs opinion
addresses only the fairness from a financial point of view, as
of the date of the opinion, of the $70.00 per share of
Anheuser-Busch common stock in cash to be received by the
holders (other than InBev and its direct and indirectly owned
subsidiaries) of shares of Anheuser-Busch common stock pursuant
to the Merger Agreement. Goldman Sachs did not express any view
on, and its opinion does not address, any other term or aspect
of the Merger Agreement or the Merger, including, without
limitation, the fairness of the Merger to, or any consideration
received in connection therewith by, the holders of any other
class of securities, creditors, or other constituencies of
Anheuser-Busch or InBev; nor as to the fairness of the amount or
nature of any compensation to be paid or payable to any of the
officers, directors or employees of Anheuser-Busch or InBev, or
class of such persons in connection with the Merger, whether
relative to the $70.00 per share of Anheuser-Busch common stock
in cash to be received by the holders (other than InBev and its
direct and indirectly owned subsidiaries) of shares of
Anheuser-Busch common stock pursuant to the Merger Agreement or
otherwise. Goldman Sachs opinion was necessarily based on
economic, monetary, market and other conditions, as in effect
on, and the information made available to it as of, the date of
the opinion. Goldman Sachs assumed no responsibility for
updating, revising or reaffirming its opinion based on
circumstances, developments or events occurring after the date
of its opinion. Goldman Sachs opinion was approved by a
fairness committee of Goldman Sachs.
The following is a summary of the material financial analyses
delivered by Goldman Sachs to the Board of Directors of
Anheuser-Busch in connection with rendering the opinion
described above. The following summary, however, does not
purport to be a complete description of the financial analyses
performed by Goldman Sachs, nor does the order of analyses
described represent relative importance or weight given to those
analyses by Goldman Sachs. Some of the summaries of the
financial analyses include information presented in tabular
format. The tables must be read together with the full text of
each summary and are alone not a complete description of Goldman
Sachs financial analyses. Except as otherwise noted, the
following quantitative information, to the extent that it is
based on market data, is based on market data as it existed on
or before the date of its opinion and is not necessarily
indicative of current market conditions.
Historical
Stock Trading Analysis.
Goldman Sachs reviewed the historical trading prices and volumes
for the shares of Anheuser-Busch common stock for the
fourteen-month period ended July 11, 2008. In addition,
Goldman Sachs calculated the premium represented by the $70.00
per share of Anheuser-Busch common stock in cash to be received
by the holders of Anheuser-Busch common stock pursuant to the
Merger Agreement in relation to: (a) the average closing
prices of the shares of Anheuser-Busch common stock on the New
York Stock Exchange for (i) the 52 week period
preceding the date of the written proposal made by InBev on
June 11, 2008 to acquire
31
Anheuser-Busch (which we call the
Proposal Date) and (ii) the 30 day
period preceding the Proposal Date; and (b) the
closing prices of the shares of Anheuser-Busch common stock on
the New York Stock Exchange (i) on May 14, 2008, four
weeks preceding the Proposal Date; (ii) on
May 22, 2008, the day prior to the first published report
of a rumor that InBev intended to acquire Anheuser-Busch (which
we call the Rumor Date) and (iii) on the day
preceding the Proposal Date. The results of these
calculations are summarized as follows:
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Implied Premium of
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$70.00 per share of
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Anheuser-Busch
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common stock
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Price per share of
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to be received
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Anheuser-Busch
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by Anheuser-Buschs
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Implied Premium to:
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common stock
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stockholders
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52 Week Period Preceding the Proposal Date
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$
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50.32
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39.1
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%
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30 day Period Preceding the Proposal Date
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$
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54.70
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28.0
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%
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May 14, 2008 (4 Weeks Preceding the Proposal Date)
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$
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51.43
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36.1
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%
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May 22, 2008 (Day Prior to the Rumor Date)
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$
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52.58
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33.1
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%
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June 10, 2008 (Day Prior to the Proposal Date)
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$
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57.15
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22.5
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%
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Selected
Transactions Analysis.
Goldman Sachs compared the premium to be paid for the shares of
Anheuser-Busch common stock (based on the $70.00 per share of
Anheuser-Busch common stock in cash to be received by the
holders compared to the closing price of the shares of
Anheuser-Busch common stock on the New York Stock Exchange on
May 22, 2008, the day prior to the Rumor Date, of $52.58
per share of Anheuser-Busch common stock) with the premia paid
for all global cash acquisitions above $5 billion since
2004 (based on the price per share payable pursuant to the
relevant transaction compared to the closing share price four
weeks prior to the announcement of the relevant transaction).
The yearly average premia for all such global cash acquisitions
ranged from 28% to 38%, with a median of 32.4%, compared to a
33.1% premium to be paid for the shares of Anheuser-Busch common
stock.
Goldman Sachs also analyzed certain information relating to the
following announced transactions above $5 billion in the
beer industry since May 2002:
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Acquisition of Scottish & Newcastle plc by The
Carlsberg Group and Heineken International (January 2008).
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Acquisition of Bavaria S.A. by SABMiller plc (July 2005).
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Acquisition of Companhia De Bebidas Das Americas by Interbrew
(March 2004).
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Acquisition of Miller Brewing Company by South African Breweries
(May 2002).
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While none of the acquired companies that participated in the
selected transactions are directly comparable to Anheuser-Busch,
the acquired companies that participated in the selected
transactions are companies with operations that, for the
purposes of analysis, may be considered similar to certain of
Anheuser-Buschs results, market size and product profile.
For each of the selected transactions, Goldman Sachs calculated
the total enterprise value of the acquired company (which is
defined as the fully-diluted equity capitalization of the
acquired company, based on the consideration received by its
shareholders, plus debt less cash and adjusted for minorities
and equity interests as appropriate) as a multiple of the
acquired companys publicly reported earnings before
interest, taxes, depreciation and amortization, adjusted for
minorities and equity interests as appropriate (which is
referred to in this section as EBITDA), for the last
reported twelve months prior to the announcement of the
respective transactions (which is referred to in this section as
LTM EBITDA). The results of these computations
resulted in enterprise value multiples of LTM EBITDA for the
acquired companies ranging from 10.1x to 13.9x.
Goldman Sachs calculated the Anheuser-Busch enterprise
value/EBITDA multiples on two bases intended to take into
account the significant implications of Anheuser-Buschs
meaningful equity investments in Modelo
32
and Tsingtao and other enterprises, which are not accounted for
in Anheuser-Buschs reported operating income, as described
below.
In the first alternative, Goldman Sachs subtracted from
Anheuser-Buschs enterprise value (based on the $70.00 per
share of Anheuser-Busch common stock in cash to be received by
the holders of shares of Anheuser-Busch common stock pursuant to
the Merger Agreement) Anheuser-Buschs implied economic
ownership percentage of the fully diluted market capitalizations
of Modelo and Tsingtao and the book value of
Anheuser-Buschs other equity investments, resulting in an
adjusted enterprise value of $49,203 million. Goldman Sachs
then calculated adjusted enterprise value/EBITDA multiples based
on the $70.00 per share of Anheuser-Busch common stock in cash
to be received by the holders of Anheuser-Busch common stock
pursuant to the Merger Agreement.
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EBITDA
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Enterprise Value Multiple of EBITDA
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March 31, 2008 LTM EBITDA ($3,916 million)
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12.6
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x
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2007A EBITDA ($3,864 million)
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12.7
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x
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2008E EBITDA (A-B Plan, which includes addback from
restructuring related costs) ($4,156 million)
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11.8
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x
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2009E EBITDA (A-B Plan) ($4,810 million)
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10.2
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x
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In the second alternative, Goldman Sachs adjusted
Anheuser-Buschs enterprise value by adding a proportionate
amount (representing Anheuser-Buschs implied economic
ownership percentage) of the debt and subtracting a
proportionate amount (representing Anheuser-Buschs implied
economic ownership percentage) of the cash of Modelo and
Tsingtao and by subtracting the book value of
Anheuser-Buschs other equity investments, resulting in an
adjusted enterprise value of $59,980 million. It also
adjusted Anheuser-Buschs EBITDA by adding to it
Anheuser-Buschs proportionate share of Modelos and
Tsingtaos EBITDA for the period in question.
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EBITDA
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Enterprise Value Multiple of EBITDA
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March 31, 2008 LTM EBITDA ($4,911 million)
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12.2
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x
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2007A EBITDA ($4,866 million)
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12.3
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x
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2008E EBITDA (A-B Plan and IBES estimates, which includes
addback from restructuring related costs) ($5,216 million)
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11.5
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x
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2009E EBITDA (A-B Plan and IBES estimates) ($5,990 million)
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10.0
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x
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Performing the enterprise value and EBITDA calculations using
the two methods described above resulted in enterprise value
multiples of LTM EBITDA for Anheuser-Busch of 12.2x or 12.6x,
compared to enterprise value multiples of LTM EBITDA ranging
from 10.1x to 13.9x for the selected announced transactions
above $5 billion in the beer industry since May 2002.
For illustrative purposes only, Goldman Sachs also calculated
the $60,723 million enterprise value of Anheuser-Busch
(based on the $70.00 per share of Anheuser-Busch common stock in
cash to be received by the holders of shares of Anheuser-Busch
common stock pursuant to the Merger Agreement) as a multiple of
Anheuser-Buschs EBITDA, which resulted in the enterprise
value/EBITDA multiples set forth below:
|
|
|
|
|
EBITDA
|
|
Enterprise Value Multiple of EBITDA
|
|
|
March 31, 2008 LTM EBITDA ($3,916 million)
|
|
|
15.5
|
x
|
2007A EBITDA ($3,864 million)
|
|
|
15.7
|
x
|
2008E EBITDA (A-B Plan, which includes addback from
restructuring related costs) ($4,156 million)
|
|
|
14.6
|
x
|
2009E EBITDA (A-B Plan) ($4,810 million)
|
|
|
12.6
|
x
|
These calculations were used to illustrate the enterprise
value/EBITDA multiple when Anheuser-Buschs economic
interest in its non-consolidated equity investments is not taken
into account.
33
Trading
Range Analysis
Goldman Sachs looked at the trading performance of SABMiller
plc, The Carlsberg Group, Molson Coors Brewing Company and
Heineken International (which companies are referred to herein
as the Brewers) over various periods of time.
Although none of the Brewers is directly comparable to
Anheuser-Busch, they were chosen because they are publicly
traded companies with operations that for purposes of analysis
may be considered similar to certain operations of
Anheuser-Busch.
Among other things, Goldman Sachs observed that, between
May 22, 2008, the day prior to the Rumor Date and
July 11, 2008, the S&P 500 Index declined 11% (the
S&P Decline) and the median share price change
of the Brewers was a decline of 16% (the Median Brewer
Share Price Decline). For illustrative purposes, Goldman
Sachs calculated how much the price of the shares of
Anheuser-Busch common stock would have declined over the same
period from the closing price of $52.58 on May 22, 2008 if
the price of the shares of Anheuser-Busch common stock had
matched the S&P Decline and the Median Brewer Share Price
Decline. The results of these computations are summarized as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Median Brewer Share
|
|
|
|
S&P 500 Index
|
|
|
Price Change
|
|
|
Hypothetical Share Price Decline from $52.58 as of
May 22, 2008
|
|
$
|
47
|
|
|
$
|
44
|
|
Present
Value of Future Share Price Analysis
Goldman Sachs performed an illustrative analysis of the implied
present value of the future price per share of
Anheuser-Buschs common stock, which is designed to provide
an indication of the present value of a theoretical future value
of a companys equity as a function of such companys
estimated future earnings and its assumed price to future
earnings per share multiple (referred to herein as a P/E
multiple). For this analysis, Goldman Sachs calculated the
implied present value of the future price per share of
Anheuser-Busch common stock (including estimated dividends) over
the four year period of
2009-2012,
based on (a) Anheuser-Buschs projected earnings per
share of Anheuser-Busch common stock set forth in
Anheuser-Buschs updated five-year strategic plan as
reviewed by the board during its meetings in June 2008 (which
included anticipated pricing increases and plans to accelerate
Anheuser-Buschs Blue Ocean cost savings
program) as more fully described under Background of the
Merger beginning on page 20 and Projected
Financial Information beginning on
page 42 (which we call the A-B Plan), and
a P/E multiple of 18.0x implied by historical averages,
(b) projected earnings per share of Anheuser-Busch common
stock derived from Wall Street Research and a P/E multiple of
18.0x implied by historical averages, (c) historical
compound average stock price growth since 2002 of 1.8% applied
to a base price of $52.58 (the market price per share of
Anheuser-Busch common stock the day prior to the Rumor Date),
and (d) adjusted projected earnings per share of
Anheuser-Busch common stock, assuming that Anheuser-Busch was
able to achieve only 50% of the additional estimated cost
savings projected in the accelerated Blue Ocean cost
savings program included in the A-B Plan and lower price
increases than projected in the A-B Plan (which is referred to
herein as the Business Sensitivity Case), and a
18.0x P/E multiple implied by historical averages. The resulting
illustrative future prices per share of Anheuser-Busch common
stock and dividends were discounted at 8%, the illustrative cost
of equity for Anheuser-Busch. The illustrative cost of equity
(the component of weighted average cost of capital applicable to
common stock and dividends) was derived by utilizing a cost of
equity analysis based on Goldman Sachs professional
judgment and on certain financial metrics, including betas, for
Anheuser-Busch and selected companies which exhibited similar
business characteristics to Anheuser-Busch. The results of these
computations resulted in a range of implied present values of
$48 to $77 per share of Anheuser-Busch common stock. Calculating
implied present value using only the projected earnings set
forth in the A-B Plan and derived from Wall Street Research, in
each case with a P/E multiple of 18.0x, resulted in a narrower
range of $66 to $77 per share of Anheuser-Busch common
stock.
Illustrative Discounted Cash Flow Analysis.
Goldman Sachs performed an illustrative discounted cash flow
analysis on Anheuser-Busch (a) using Anheuser-Buschs
management projections in the A-B Plan and valuing
Anheuser-Buschs stakes in Modelo
34
and Tsingtao at implied market values of such stakes as of the
date of analysis of $11 billion and $780 million,
respectively, (b) using the Business Sensitivity Case and
valuing Anheuser-Buschs stakes in Modelo and Tsingtao at
implied market values of such stakes as of the date of analysis
of $11 billion and $780 million, respectively, and
(c) using Anheuser-Buschs management projections in
the A-B Plan, as adjusted by including a percentage of the
implied discounted free cash flow value of Modelo equal to
Anheuser-Buschs percentage equity stake (despite that
Anheuser-Busch only receives dividends from Modelo), and valuing
Tsingtao at the implied market value of Anheuser-Buschs
stake as of the date of analysis of $780 million. Goldman
Sachs calculated indications of net present value of free cash
flows for Anheuser-Busch for the years 2008 through 2012,
discounted to the end of June 2008, on each of the three bases
described above using discount rates ranging from 6.5% to 7.5%
(referred to herein as the Anheuser-Busch illustrative
discount rates). The Anheuser-Busch illustrative discount
rates were derived by utilizing a weighted average cost of
capital analysis based on Goldman Sachs professional
judgment and on certain financial metrics, including betas, for
Anheuser-Busch and selected companies which exhibited similar
business characteristics to Anheuser-Busch. Goldman Sachs
calculated implied prices per share of Anheuser-Busch common
stock on each of the three bases described above using
illustrative terminal values in the year 2012 based on
perpetuity growth rates ranging from 1.25% to 2.25%. These
illustrative terminal values were then discounted using the
Anheuser-Busch illustrative discount rates and added to the net
present value of the free cash flows for Anheuser-Busch for the
years 2008 through 2012 to calculate implied indications of
present values (except in the case of (c) above, to which
the net present value of a percentage of the implied discounted
free cash flow value of Modelo equal to Anheuser-Buschs
percentage equity stake was also added). The implied discounted
free cash flow value of Modelo was calculated using the
methodologies used to calculate Anheuser-Buschs
indications of net present value of free cash flows, implied
prices per share and implied indications of present values, each
as described above, except that Goldman Sachs based its terminal
value indications in the year 2012 on exit multiples ranging
from 10.0x EBITDA to 12.0x EBITDA and utilized discount rates
ranging from 7.5% to 9.5% (referred to herein as the
Modelo illustrative discount rates). The Modelo
illustrative discount rates were derived by utilizing a weighted
average cost of capital analysis of Modelo based on Goldman
Sachs professional judgment and on certain financial
metrics, including betas, for Modelo and selected companies
which exhibited similar business characteristics to Modelo.
These rates differed from the Anheuser-Busch illustrative
discount rates because of the different financial metrics and
characteristics of Modelo and Anheuser-Busch. The following
table presents the results of this analysis:
|
|
|
|
|
|
|
Illustrative Per Share Value Indications
|
|
|
Anheuser-Busch Plan (with Modelo & Tsingtao at Market)
|
|
$
|
64-$88
|
|
Business Sensitivity Case (with Modelo & Tsingtao at
Market)
|
|
$
|
57-$78
|
|
Anheuser-Busch Plan (with Tsingtao at Market and including
Modelo discounted free cash flow)
|
|
$
|
69-$97
|
|
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the
summary set forth above, without considering the analyses as a
whole, could create an incomplete view of the processes
underlying Goldman Sachs opinion. In arriving at its
fairness determination, Goldman Sachs considered the results of
all of its analyses and did not attribute any particular weight
to any factor or analysis considered by it. Rather, Goldman
Sachs made its determination as to fairness on the basis of its
experience and professional judgment after considering the
results of all of its analyses. No company or transaction used
in the above analyses as a comparison is directly comparable to
Anheuser-Busch or the contemplated Merger.
Goldman Sachs prepared these analyses for purposes of Goldman
Sachs providing its opinion to Anheuser-Buschs board
of directors as to the fairness, from a financial point of view,
to the holders (other than InBev and its direct and indirectly
owned subsidiaries) of shares of Anheuser-Busch common stock of
the $70.00 per share of Anheuser-Busch common stock in cash to
be received by such holders pursuant to the Merger Agreement.
These analyses do not purport to be appraisals nor do they
necessarily reflect the prices at which businesses or securities
actually may be sold. Analyses based upon forecasts of future
results are not necessarily indicative of actual future results,
which may be significantly more or less favorable than suggested
by these analyses. Because these analyses are inherently subject
to uncertainty, being based upon numerous
35
factors or events beyond the control of the parties or their
respective advisors, none of Anheuser-Busch, InBev, Goldman
Sachs or any other person assumes responsibility if future
results are materially different from those forecast.
The merger consideration was determined through
arms-length negotiations between Anheuser-Busch and InBev
and was approved by Anheuser-Buschs board of directors.
Goldman Sachs provided advice to Anheuser-Busch during these
negotiations. Goldman Sachs did not, however, recommend any
specific amount of consideration to Anheuser-Busch or its board
of directors or that any specific amount of consideration
constituted the only appropriate consideration for the Merger.
As described above, Goldman Sachs opinion to
Anheuser-Buschs board of directors was one of many factors
taken into consideration by the Anheuser-Busch board of
directors in making its determination to approve the Merger
Agreement. The foregoing summary does not purport to be a
complete description of the analyses performed by Goldman Sachs
in connection with the fairness opinion and is qualified in its
entirety by reference to the written opinion of Goldman Sachs
attached as Annex B.
Goldman Sachs and its affiliates are engaged in investment
banking and financial advisory services, securities trading,
investment management, principal investment, financial planning,
benefits counseling, risk management, hedging, financing,
brokerage activities and other financial and non-financial
activities and services for various persons and entities. In the
ordinary course of these activities and services, Goldman Sachs
and its affiliates may at any time make or hold long or short
positions and investments, as well as actively trade or effect
transactions, in the equity, debt and other securities (or
related derivative securities) and financial instruments
(including bank loans and other obligations) of Anheuser-Busch,
InBev and any of their respective affiliates or any currency or
commodity that may be involved in the Merger for their own
account and for the accounts of their customers. Goldman Sachs
acted as financial advisor to Anheuser-Busch in connection with,
and participated in certain of the negotiations leading to, the
Merger and acted as financial advisor to Anheuser-Busch with
regard to possible strategic alternatives to the Merger. In
addition, Goldman Sachs has provided certain investment banking
and other financial services to Anheuser-Busch and its
affiliates from time to time, including having acted as
co-manager with respect to a public offering of
Anheuser-Buschs $300,000,000 5.60% Notes due 2017 in
February 2007; as co-manager with respect to a public
offering of Anheuser-Buschs $500,000,000
6.450% Debentures due 2037 in August 2007; and as
joint bookrunning manager with respect to $500,000,000
5.50% Notes due 2018 in November 2007. During the past
two years, Goldman Sachs has received aggregate fees from
Anheuser-Busch for investment banking and other financial
advisory services unrelated to the Merger of approximately
$3.4 million. Goldman Sachs also has provided certain
investment banking and other financial services to InBev and its
affiliates from time to time, including having acted as an
arranger in the lending syndicate in connection with
InBevs 2,500,000,000 bank loan in December 2005; and
as one of the counterparties to a currency swap and an interest
rate swap entered into by InBev in 2007 and 2008, respectively.
Goldman Sachs also may provide investment banking and other
financial services to Anheuser-Busch, InBev and their respective
affiliates in the future. In connection with the above-described
services Goldman Sachs has received, and may receive in the
future, compensation.
In early September 2008, InBev offered an affiliate of Goldman
Sachs the opportunity to participate in the debt financing to be
provided in connection with the transaction for customary fees.
Such affiliate has not made any determination whether it intends
to participate.
The board of directors of Anheuser-Busch selected Goldman Sachs
as its financial advisor because it is an internationally
recognized investment banking firm that has substantial
experience in transactions similar to the Merger. Pursuant to a
letter agreement dated May 27, 2008, Anheuser-Busch engaged
Goldman Sachs to act as its financial advisor in connection
with, among other things, its analysis and consideration of
unsolicited proposals with respect to the possible purchase of
all or a significant portion of the stock or assets of
Anheuser-Busch. Pursuant to a second letter agreement dated
July 7, 2008, Goldman Sachs engagement was made
specific to the InBev proposal as well as to a sale of
Anheuser-Busch to any third party. Pursuant to the terms of
these engagement letters, Anheuser-Busch agreed to pay to
Goldman Sachs $40,000,000 if the Merger is consummated,
$10,000,000 of which was paid after the execution of the Merger
Agreement. If the Merger
36
Agreement had not been signed and InBev had instead withdrawn
its proposal to purchase Anheuser-Busch, Anheuser-Busch would
have been required to pay to Goldman Sachs a fee of as much as
$30,000,000, depending on the date on which InBev had withdrawn
its proposal. In addition, Anheuser-Busch has agreed to
reimburse Goldman Sachs for its expenses, including
attorneys fees and disbursements, and to indemnify Goldman
Sachs and related persons against various liabilities, including
certain liabilities under the federal securities laws.
Opinion
of Citigroup Global Markets Inc.
We entered into an engagement letter with Citi dated
June 12, 2008, pursuant to which Citi agreed to act as
financial advisor to Anheuser-Busch in connection with, among
other things, preparing for any unsolicited proposal for a
change of control of Anheuser-Busch, any potential proxy contest
or shareholder consent solicitation, or a sale of all or a
majority of Anheuser-Buschs business, assets or
securities, or a merger or similar combination of Anheuser-Busch
with another entity. In connection with this engagement, we
requested that Citi evaluate the fairness, from a financial
point of view, of the consideration to be received in the Merger
by holders of our common stock. On July 13, 2008, at a
meeting of our board of directors held to evaluate the Merger,
Citi rendered to our board of directors an oral opinion, which
was confirmed by delivery of a written opinion dated
July 13, 2008, to the effect that, as of that date and
based on and subject to the matters described in its opinion,
the $70.00 cash per share merger consideration was fair, from a
financial point of view, to the holders of our common stock.
The full text of Citis written opinion, dated
July 13, 2008, which describes the assumptions made,
procedures followed, matters considered and limitations on the
review undertaken, is attached to this proxy statement as
Annex C and is incorporated into this proxy statement by
reference. Citis opinion was provided to
Anheuser-Buschs board of directors in connection with its
evaluation of the merger consideration from a financial point of
view. Citis opinion does not address any other aspects or
implications of the Merger and does not constitute a
recommendation to any stockholder as to how such stockholder
should vote or act on any matters relating to the proposed
Merger.
In arriving at its opinion, Citi:
|
|
|
|
|
reviewed the proposed Merger Agreement;
|
|
|
|
held discussions with certain of Anheuser-Buschs senior
officers, directors and other representatives and advisors
concerning Anheuser-Buschs business, operations and
prospects;
|
|
|
|
examined certain publicly available business and financial
information relating to Anheuser-Busch;
|
|
|
|
examined certain financial forecasts and other information and
data relating to Anheuser-Busch which were provided to or
otherwise discussed with Citi by Anheuser-Buschs
management;
|
|
|
|
reviewed the financial terms of the Merger as set forth in the
proposed Merger Agreement in relation to, among other things,
current and historical market prices and trading volumes of
Anheuser-Buschs common stock, Anheuser-Buschs
historical and projected earnings and other operating data and
Anheuser-Buschs capitalization and financial condition;
|
|
|
|
considered, to the extent publicly available, the financial
terms of certain other transactions which Citi considered
relevant in evaluating the Merger;
|
|
|
|
analyzed certain financial, stock market and other publicly
available information relating to the businesses of other
companies whose operations Citi considered relevant in
evaluating those of Anheuser-Busch; and
|
|
|
|
conducted such other analyses and examinations and considered
such other information and financial, economic and market
criteria as Citi deemed appropriate in arriving at its opinion.
|
In rendering its opinion, Citi assumed and relied, without
independent verification, upon the accuracy and completeness of
all financial and other information and data publicly available
or provided to or otherwise reviewed by or discussed with Citi
and upon the assurances of Anheuser-Buschs management that
it was not aware of any relevant information that was omitted or
remained undisclosed to Citi. With respect to financial
forecasts and other information and data relating to
Anheuser-Busch provided to or otherwise reviewed by or
37
discussed with Citi, Citi was advised by Anheuser-Buschs
management that such forecasts and other information and data
were reasonably prepared on bases reflecting the best currently
available estimates and judgments of Anheuser-Buschs
management as to Anheuser-Buschs future financial
performance. Citi assumed, with Anheuser-Buschs consent,
that the Merger would be consummated in accordance with the
terms of the Merger Agreement, without waiver, modification or
amendment of any material term, condition or agreement and that,
in the course of obtaining the necessary regulatory or third
party approvals, consents and releases for the Merger, no delay,
limitation, restriction or condition would be imposed that would
have a material adverse effect on the Merger, or the
parties ability to effect the Merger.
Citi did not make, and it was not provided with, an independent
evaluation or appraisal of the assets or liabilities (contingent
or otherwise) of Anheuser-Busch, and Citi did not make any
physical inspection of the properties or assets of
Anheuser-Busch. Citis opinion does not address
Anheuser-Buschs underlying business decision to effect the
Merger, the relative merits of the Merger as compared to any
alternative business strategies that might exist for
Anheuser-Busch or the effect of any other transaction in which
Anheuser-Busch might engage. Citi expressed no view as to, and
its opinion does not address, the fairness (financial or
otherwise) of the amount or nature or any other aspect of any
compensation to any officers, directors or employees of any
parties to the Merger, or any class of such persons, relative to
the merger consideration. Citis opinion was necessarily
based on information available to Citi, and financial, stock
market and other conditions and circumstances existing, as of
the date of its opinion.
In preparing its opinion, Citi performed a variety of financial
and comparative analyses, including those described below. The
summary of these analyses is not a complete description of the
analyses underlying Citis opinion. The preparation of a
financial opinion is a complex analytical process involving
various determinations as to the most appropriate and relevant
methods of financial analysis and the application of those
methods to the particular circumstances and, therefore, a
financial opinion is not readily susceptible to summary
description. Citi arrived at its ultimate opinion based on the
results of all analyses undertaken by it and assessed as a
whole, and did not draw, in isolation, conclusions from or with
regard to any one factor or method of analysis for purposes of
its opinion. Accordingly, Citi believes that its analyses must
be considered as a whole and that selecting portions of its
analyses and factors or focusing on information presented in
tabular or summary/graphical format, without considering all
analyses and factors or the narrative description of the
analyses, could create a misleading or incomplete view of the
processes underlying its analyses and opinion.
In its analyses, Citi considered industry performance, general
business, economic, market and financial conditions and other
matters existing as of the date of its opinion, many of which
are beyond the control of Anheuser-Busch. No company, business
or transaction used in those analyses as a comparison is
identical or directly comparable to Anheuser-Busch or the
Merger, and an evaluation of those analyses is not entirely
mathematical. Rather, the analyses involve complex
considerations and judgments concerning financial and operating
characteristics and other factors that could affect the
acquisition, public trading or other values of the companies,
business segments or transactions analyzed.
The estimates contained in Citis analyses and the
valuation ranges resulting from any particular analysis are not
necessarily indicative of actual values or predictive of future
results or values, which may be significantly more or less
favorable than those suggested by its analyses. In addition,
analyses relating to the value of businesses or securities do
not necessarily purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold.
Accordingly, the estimates used in, and the results derived
from, Citis analyses are inherently subject to substantial
uncertainty.
The type and amount of consideration payable in the Merger was
determined through negotiations between Anheuser-Busch and InBev
and the decision to enter into the Merger was solely that of
Anheuser-Buschs board of directors. Citis opinion
was only one of many factors considered by Anheuser-Buschs
board of directors in its evaluation of the Merger and should
not be viewed as determinative of the views of
Anheuser-Buschs board of directors or management with
respect to the Merger or the merger consideration.
The following is a summary of the material financial analyses
presented to Anheuser-Buschs board of directors in
connection with Citis opinion. The financial analyses
summarized below include information presented in tabular
format. In order to fully understand Citis financial
analyses, the tables
38
must be read together with the text of each summary. The
tables alone do not constitute a complete description of the
financial analyses. Considering the data below without
considering the full narrative description of the financial
analyses, including the methodologies and assumptions underlying
the analyses, could create a misleading or incomplete view of
Citis financial analyses.
Stock
Trading History and Implied Premiums
Citi considered the merger consideration of $70.00 per share
offered to holders of Anheuser-Buschs common stock in the
Merger and calculated the implied premiums represented relative
to the closing price of Anheuser-Buschs common stock on or
during (i) the one-month period ended on May 22, 2008,
the last day of trading prior to rumors regarding a potential
proposal from InBev, (ii) July 10, 2008, the last
trading day prior to rumors regarding InBevs $70.00 per
share proposal to acquire Anheuser-Busch, (iii) the 52-week
high ended on May 22, 2008 and (iv) the all time high
on October 21, 2002. The results of this analysis are set
forth below:
|
|
|
|
|
|
|
Implied Premium at
|
|
|
|
$70 Offer
|
|
Date
|
|
(%)
|
|
|
One-Month Average ended on May 22, 2008
|
|
|
39
|
|
July 10, 2008
|
|
|
14
|
|
52 Week High ended on May 22, 2008
|
|
|
29
|
|
All time high (October 21, 2002)
|
|
|
27
|
|
Citi also calculated the implied premiums paid in all-cash
transactions valued above $10 billion since January 1,
2003, based on the target companys closing share price one
day prior to the announcement of the transaction (or, in the
event that there were public reports prior to announcement of
the transaction, the unaffected share price). This analysis
resulted in a range of implied premiums of 25% to 35%, as
compared to the premium to Anheuser-Buschs closing share
price on May 22, 2008 of 33% implied by the Merger
consideration of $70.00 per share.
Selected
Precedent Transactions Analysis
Using publicly available information, Citi reviewed transaction
values in the following seven transactions:
|
|
|
|
|
Announcement Date
|
|
Acquiror
|
|
Target
|
|
January 2008
|
|
Heineken N.V.- Carlsberg
A/S(*)
|
|
Scottish & Newcastle plc.
|
January 2008
|
|
Carlsberg
A/S(*)
|
|
Scottish & Newcastle plc.
|
January 2008
|
|
Heineken
N.V.(*)
|
|
Scottish & Newcastle plc.
|
July 2005
|
|
SABMiller plc
|
|
Bavaria S.A.
|
March 2004
|
|
Companhia de Bedidas das Amercias AmBev
|
|
Labatt Breweries of Canada
|
March 2004
|
|
Interbrew S.A.
|
|
Companhia de Bedidas das
Amercias AmBev
|
May 2002
|
|
South African Breweries (SAB)
|
|
Miller Brewing Company
|
|
|
|
(*) |
|
Citi considered the joint acquisition of Scottish &
Newcastle plc. by Heineken N.V. and Carlsberg A/S as a whole,
and separately, the subsequent division of Scottish &
Newcastle plc. by each of Heineken N.V. and Carlsberg A/S. |
These transactions were selected because they involved the
acquisition of global brewers for a value of more than
$5 billion. Citi reviewed, among other things, firm value
(calculated as equity value implied by the purchase price plus
straight debt, minority interest, straight preferred stock and
out-of-the-money convertibles, less cash and long term equity
investments valued at the current market price where available,
and at book value where market price is not available) in each
transaction as multiples of the last twelve months EBITDA for
each target (calculated as earning before interest, taxes,
depreciation and amortization). This analysis implied firm value
multiples of last twelve months EBITDA ranging from 10.0x to
14.5x. Citi applied this range of multiples to
Anheuser-Buschs last twelve months EBITDA. Financial data
for the selected precedent
39
transactions were based upon public filings and publicly
available information at the time of announcement, and financial
data for Anheuser-Busch were based upon internal estimates of
Anheuser-Buschs managements. This analysis indicated the
following per share equity reference range for Anheuser-Busch,
as compared to the per share merger consideration:
|
|
|
|
|
Equity Reference Range
|
|
Per Share
|
|
for Anheuser-Busch
|
|
Merger Consideration
|
|
|
$58 $80
|
|
$
|
70
|
|
Research
Analyst Price Targets
Citi reviewed the reports of nine research analysts found in
publicly available equity research. The analysis indicated the
following per share reference range for the value of
Anheuser-Buschs common stock:
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Merger
|
|
|
|
Wall Street Research Price Targets for Anheuser-Busch
|
|
|
Consideration
|
|
|
|
|
|
|
|
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|
Post-Announcement of
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|
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|
|
|
|
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|
Updated Financial Plan on
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|
|
|
|
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Pre-InBev Rumors
|
|
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Post-InBev Rumors
|
|
|
June 27,
2008(*)
|
|
|
|
|
|
High
|
|
$
|
58
|
|
|
$
|
65
|
|
|
$
|
68
|
|
|
$
|
70
|
|
Low
|
|
$
|
51
|
|
|
$
|
51
|
|
|
$
|
61
|
|
|
$
|
70
|
|
Median
|
|
$
|
54
|
|
|
$
|
59
|
|
|
$
|
65
|
|
|
$
|
70
|
|
|
|
|
(*) |
|
Based on four research analysts who updated their price targets
after the announcement of the updated Anheuser-Busch financial
plan. |
Selected
Publicly Traded Companies Analysis
Citi reviewed financial and stock market information and public
market trading multiples of Anheuser-Busch (based on
analysts research for the period ending on May 22,
2008) and the following six companies:
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Molson Coors Brewing Company
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Grupo Modelo S.A.B. de C.V.
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SABMiller plc
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InBev N.V./S.A.
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Carlsberg A/S
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Heineken N.V.
|
These companies were selected because they are all publicly
traded global brewing companies that Citi believed are most
comparable to Anheuser-Busch. As part of its selected comparable
company analysis, Citi calculated and analyzed the respective
ratios of firm value (calculated as equity value plus straight
debt, minority interest, straight preferred stock, and
out-of-the-money convertibles, less cash and long term equity
investments valued at the current market price where available,
and at book value where market price is not available) to EBITDA
(calculated as earnings before interest, taxes, depreciation and
amortization) as estimated for the calendar year 2009. Citi also
calculated and analyzed the respective ratio of stock price to
estimated earnings per share (P/E) for calendar year 2009.
The results of this selected publicly traded comparable
companies analysis are summarized below:
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|
Firm Value / EBITDA
|
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|
Price / Earnings
|
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|
2009E
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|
|
2009E
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|
2009E
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|
2009E
|
|
|
|
(as of 5/22/08)
|
|
|
(as of 7/10/08)
|
|
|
(as of 5/22/08)
|
|
|
(as of 7/10/08)
|
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|
High
|
|
|
9.5
|
x
|
|
|
8.8
|
x
|
|
|
16.6
|
x
|
|
|
16.0
|
x
|
Low
|
|
|
7.2
|
x
|
|
|
6.3
|
x
|
|
|
13.5
|
x
|
|
|
11.0
|
x
|
Median
|
|
|
8.1
|
x
|
|
|
7.1
|
x
|
|
|
14.2
|
x
|
|
|
12.7
|
x
|
Estimated financial data of the selected companies were based on
research analysts estimates, public filings and other
publicly available information, and estimated financial data of
Anheuser-Busch was based on
40
internal estimates of Anheuser-Buschs management. Based on
the comparable company metrics analyzed, Citi selected a
multiple range of 7.5x to 9.5x to the ratio of
Anheuser-Buschs firm value to its EBITDA for the calendar
year 2009 and 13.5x to 16.5x to Anheuser-Buschs estimated
Earning Per Share for calendar year 2009. This analysis
indicated the following selected per share equity reference
range for Anheuser-Buschs common stock, as compared to the
merger consideration of $70.00 per share:
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|
|
|
|
|
|
|
|
|
Selected Per Share Equity
|
|
|
|
|
|
|
Reference Range for
|
|
|
Per Share Merger
|
|
|
|
Anheuser-Busch
|
|
|
Consideration
|
|
|
2009 Estimated EBITDA
|
|
$
|
54 $66
|
|
|
$
|
70
|
|
2009 Estimated Earning Per Share
|
|
$
|
53 $64
|
|
|
$
|
70
|
|
Discounted
Cash Flow Analysis
Citi performed a discounted cash flow analysis to calculate the
estimated present value of the standalone unleveraged, after-tax
free cash flows that Anheuser-Busch could generate for calendar
years 2008 through 2018. The analysis was based on internal
estimates provided by Anheuser-Buschs management as
summarized on page 43. Citi also evaluated
managements internal estimates after applying certain
sensitivities to take into account the possibility that
(i) only seventy-five percent of the cost-savings
associated with managements updated financial plan are
realized, which is referred to as Sensitivity Case 1, and
(ii) only seventy-five percent of the outlined pricing-mix
benefits associated with managements updated financial
plan are realized, which is referred to as Sensitivity Case 2.
Citi estimates for consolidated growth in unleveraged free cash
flow for calendar years 2013 through 2018 were prepared after
consulting with Anheuser-Busch management, resulting in a range
of 3.9% to 1.8%. Estimated terminal values for Anheuser-Busch
were calculated by applying a range of perpetuity growth rates
for each of Anheuser-Buschs business units, resulting in a
consolidated range of 1.6% to 2.2% to Anheuser-Buschs
calendar year 2018 estimated unleveraged free cash flow. The
cash flows and terminal values were then discounted to present
value using discount rates ranging from 7.25% to 7.75%, which
range was derived utilizing a weighted average cost of capital
analysis based on certain financial metrics, and taking into
account market volatility, for Anheuser-Busch and selected
global brewing companies. This analysis indicated the following
implied per share equity reference ranges for
Anheuser-Buschs common stock, as compared to the per share
merger consideration of $70.00 per share:
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|
|
|
|
|
Implied Per Share Equity Reference Ranges for
Anheuser-Busch
|
|
Per Share Merger
|
Management Plan
|
|
Sensitivity Case 1
|
|
Sensitivity Case 2
|
|
Consideration
|
|
$69 $79
|
|
$66 $75
|
|
$62 $70
|
|
$70
|
Miscellaneous
Under the terms of Citis engagement, Anheuser-Busch has
agreed to pay Citi for its financial advisory services in
connection with the Merger a quarterly fee of $500,000, during
the term of Citis engagement, not to exceed $2,000,000,
and an additional fee of $30 million, payable upon the
consummation of the Merger. Anheuser-Busch also has agreed to
reimburse Citi for reasonable travel and other out-of-pocket
expenses incurred by Citi in performing its services, including
reasonable fees and expenses of its legal counsel, and to
indemnify Citi and related persons against liabilities,
including liabilities under the federal securities laws, arising
out of its engagement.
Citi and its affiliates in the past have provided services to
Anheuser-Busch and InBev unrelated to the proposed Merger, for
which services Citi and such affiliates have received
compensation, including, without limitation, (i) for
Anheuser-Busch, acted as co-manager with respect to the offering
of Anheuser-Buschs $500,000,000 5.50% Notes due 2018
in November 2007, co-manager with respect to the offering of
Anheuser-Buschs $500,000,000 6.450% Debentures
due 2037 in August 2007, bookrunner with respect to the
offering of Anheuser-Buschs $300,000,000 5.60% Notes due
2017 in February 2007, lender in connection with a
$55 million financing commitment and joint document agent
on a $500 million revolving credit facility in February
2008 and (ii) for InBev, in December 2007, provided an
opinion with respect to AmBevs acquisition of the
remaining stake in Quilmes Industrial SA, which is referred to
as Quinsa, in July 2007, acted as bookrunner on AmBevs BRL
300 million senior unsecured notes due 2017 and in July
2006, acted as
41
bookrunner on AmBevs BRL 2 billion local debentures
(two tranches) to fund the acquisition of the remaining shares
of Quinsa. Since January 1, 2006, Citi has received from
Anheuser-Busch aggregate fees of approximately $3.9 million
for services unrelated to the transaction. In the ordinary
course of Citis business, Citi and its affiliates may
actively trade or hold the securities of Anheuser-Busch and
InBev for its own account or for the account of its customers
and, accordingly, may at any time hold a long or short position
in such securities. In addition, Citi and its affiliates
(including Citigroup Inc. and its affiliates) may maintain
relationships with Anheuser-Busch, and InBev and their
respective affiliates.
Anheuser-Busch selected Citi to provide certain financial
advisory services in connection with the Merger based on
Citis reputation and experience. Citi is an
internationally recognized investment banking firm which
regularly engages in the valuation of businesses and their
securities in connection with mergers and acquisitions,
negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other
purposes.
Projected
Financial Information
Anheuser-Buschs senior management is wary of making
detailed projections for extended periods due to the
unpredictability of the underlying assumptions and estimates.
However, certain financial forecasts were prepared by our senior
management as part of an annual update of the long-term
strategic plan in June 2008 and were thereafter made available
to Goldman Sachs, Citi and InBev in connection with their
consideration of the Merger. There were no material differences
between the projections provided to Goldman Sachs and Citi in
connection with their evaluation of InBevs $70 per share
proposal (which are summarized on page 43 of this proxy
statement) and the projections provided to Goldman Sachs and
Citi in connection with their evaluation of InBevs $65 per
share proposal. We have included the material projections in
this proxy statement to provide our stockholders access to
certain nonpublic information considered by InBev
and/or the
board of directors for purposes of considering and evaluating
the Merger. The inclusion of this information should not be
regarded as an indication that any of Goldman Sachs, Citi, InBev
or any other recipient of this information considered, or now
considers, it to be a reliable prediction of future results.
The projections reflect numerous estimates and assumptions with
respect to industry performance, general business, economic,
regulatory, market and financial conditions, as well as matters
specific to Anheuser-Buschs business, many of which are
beyond Anheuser-Buschs control. These projections were, in
general, prepared solely for internal use and are subjective in
many respects; they are susceptible to interpretations and
periodic revision based on actual experience and business
developments. As a result, there can be no assurance that the
projected results will be realized or that actual results will
not be significantly higher or lower than projected. Since the
projections cover multiple years, such information by its nature
becomes less reliable with each successive year. The projections
were not prepared with a view toward public disclosure or toward
complying with GAAP, the published guidelines of the SEC
regarding projections or the guidelines established by the
American Institute of Certified Public Accountants for
preparation and presentation of prospective financial
information. Neither Anheuser-Buschs independent
registered public accounting firm, nor any other independent
accountants, have compiled, examined, or performed any
procedures with respect to the prospective financial information
contained herein, nor have they expressed any opinion or any
other form of assurance on such information or its
achievability, and assume no responsibility for, and disclaim
any association with, the prospective financial information. The
PricewaterhouseCoopers LLP reports incorporated by reference in
this proxy statement relate to Anheuser-Buschs historical
financial information. They do not extend to the projected
financial information and should not be read to do so.
Furthermore, the financial projections do not take into account
any circumstances or events occurring after the date they were
prepared.
Anheuser-Busch has made publicly available its actual results of
operations for the quarter and six months ended June 30,
2008. You should review Anheuser-Buschs Quarterly Report
on
Form 10-Q
for the quarter ended June 30, 2008 to obtain this
information. See Where You Can Find More
Information. Readers of this proxy statement are cautioned
not to place undue reliance on the projections set forth below.
No one has made or makes any representation to any stockholder
regarding the information included in these projections.
42
The inclusion of projections in this proxy statement should not
be regarded as an indication that such projections will be an
accurate prediction of future events, and they should not be
relied on as such. Except as required by applicable securities
laws, Anheuser-Busch does not intend to update, or otherwise
revise the material projections to reflect circumstances
existing after the date when made or to reflect the occurrence
of future events, even in the event that any or all of the
assumptions are shown to be in error. These projections do not
give effect to the Merger.
The projections, which assume full implementation of
Anheuser-Buschs Blue Ocean program and pricing
initiatives, are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In millions of dollars, except per share amounts
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
Net Sales
|
|
|
17,721
|
|
|
|
18,647
|
|
|
|
19,585
|
|
|
|
20,250
|
|
|
|
20,926
|
|
Operating Profit(1)
|
|
|
3,162
|
|
|
|
3,811
|
|
|
|
3,984
|
|
|
|
4,273
|
|
|
|
4,442
|
|
Earnings Per Share(1)
|
|
|
3.13
|
|
|
|
3.90
|
|
|
|
4.39
|
|
|
|
4.90
|
|
|
|
5.34
|
|
Free Cash Flow(2)
|
|
|
2,177
|
|
|
|
2,608
|
|
|
|
2,734
|
|
|
|
2,951
|
|
|
|
2,946
|
|
EBITDA without Equity Income(3)
|
|
|
4,200
|
|
|
|
4,800
|
|
|
|
5,000
|
|
|
|
5,300
|
|
|
|
5,400
|
|
Equity Income, Net of Tax
|
|
|
642
|
|
|
|
699
|
|
|
|
779
|
|
|
|
850
|
|
|
|
931
|
|
|
|
|
(1) |
|
Results are normalized to exclude one-time gains, losses and
expenses including the anticipated $300 million to
$400 million (equal to 25 to 33 cents in earnings per
share) associated with the Blue Ocean program. |
|
(2) |
|
Defined as operating cash flow, net of changes in working
capital, minus capital expenditures. |
|
(3) |
|
EBITDA is calculated as pretax income plus depreciation and
amortization expense, plus net interest cost (interest expense
less capitalized interest). EBITDA was rounded as above in
projections shown to Anheuser-Buschs board of directors
and to InBev. |
Financing
of the Merger
InBev and Merger Sub have estimated that the total amount of
funds necessary to consummate the Merger and related
transactions will be approximately $54.8 billion, including
(i) the financing of the Merger, including payment of
related transaction charges, fees and expenses, and
(ii) certain fees and expenses and accrued but unpaid
interest on Anheuser-Buschs outstanding indebtedness.
InBev has said it intends to fund the transaction with new
credit facilities and equity financing. Funding of the equity
and debt financing is subject to the satisfaction of the
conditions set forth in the facilities under which the financing
will be provided. Consummation of the Merger is not conditioned
upon InBevs obtaining financing.
In connection with an anticipated transaction with
Anheuser-Busch, InBev entered into the following definitive
financing arrangements, copies of which have been provided to us:
|
|
|
|
|
US$45,000,000,000 Senior Facilities Agreement, dated as of
July 12, 2008 as amended as of July 23, 2008,
August 21, 2008 and September 3, 2008 for InBev and
InBev Worldwide S.A.R.L., arranged by Banco Santander, S.A.,
Barclays Capital, BNP Paribas, Deutsche Bank AG, London Branch,
Fortis Bank SA/NV, ING Bank N.V., J.P. Morgan PLC, Mizuho
Corporate Bank, LTD., the Bank of Tokyo-Mitsubishi UFJ, LTD. and
The Royal Bank of Scotland PLC, as Mandated Lead Arrangers and
Bookrunners, and Fortis Bank SA/NV, acting as Agent and Issuing
Bank.
|
|
|
|
US$5,600,000,000 Bridge Facility Agreement, dated as of
July 12, 2008 as amended and increased to US$9,800,000,000
as of July 23, 2008 for InBev, and as further amended on
September 3, 2008, arranged by Banco Santander, S.A., BNP
Paribas, Deutsche Bank AG, London Branch, Fortis Bank SA/NV, ING
Bank N.V., J.P. Morgan PLC and The Royal Bank of Scotland
PLC, as Mandated Lead Arrangers and Fortis Bank SA/NV, acting as
Agent.
|
The availability of the debt financing is subject only to
(a) satisfaction of customary corporate,
acquisition-related and finance documentary conditions
precedent; (b) there being no change of control of InBev;
(c) in respect of each individual lender, there being no
illegality affecting that lenders obligations to
43
lend; (d) there being no continuing major event of default
or breach of a major representation; (e) consummation of
the Merger; and (f) InBev receiving investment grade credit
ratings from S&P and Moodys. Major events of default
are limited to non payment; breach of merger restrictions;
fundamental change in the nature of business conducted; breach
of restrictions on the granting of security; breach of certain
obligations relating to the terms of the acquisition; insolvency
related events; unlawfulness of the obligors obligations
or repudiation of the finance documents. Major representations
are limited to those relating to legal status; power to carry on
operations; binding nature of obligations under finance
documents; non conflict of obligation under finance documents
with law or other agreements; power and authority to enter into
finance documents; validity and admissibility in evidence of
finance documents and pari passu ranking of obligations under
the finance documents. Furthermore, major events of default and
major representations relate only to InBev, Merger Sub, and
InBev Worldwide S.A.R.L. and material subsidiaries of InBev,
excluding Anheuser-Busch or any of its subsidiaries.
In accordance with the Merger Agreement, InBev has agreed to
satisfy on a timely basis all conditions applicable to InBev
under the senior debt and bridge facility agreements and must
obtain and consummate the financing contemplated by the senior
debt and bridge facility agreements and if such financing is
unavailable, obtain and consummate alternative financing.
InBev must give Anheuser-Busch prompt notice upon becoming aware
of any termination of the senior debt and bridge facility
agreements and of the occurrence of any event that would prevent
InBev from satisfying one or more of the conditions to initial
utilization in the senior debt and bridge facility agreements.
In the event that InBev becomes aware of any event or
circumstance that makes any portion of the financing of the
senior debt and bridge facility agreements unavailable prior to
the Termination Date (as described below) on the terms and
conditions set forth in the senior debt and bridge facility
agreements, InBev must secure as promptly as practicable any
such unavailable portion from alternative sources.
Each of InBev and Merger Sub have expressly acknowledged and
agreed that the closing and the consummation of the Merger is
not conditioned on the availability of the funding under the
senior debt and bridge facility agreements or any alternative
financing arrangement.
Interests
of Anheuser-Buschs Directors and Executive Officers in the
Merger
In considering the recommendation of our board of directors with
respect to the Merger Agreement, holders of shares of
Anheuser-Busch common stock should be aware that Anheuser-Busch
executive officers and directors have certain interests in the
Merger that may be different from, or in addition to, those of
our stockholders generally. These interests may create potential
conflicts of interest. Our board of directors was aware that
these interests existed when it approved the Merger Agreement.
Such interests relate to, or arise from, among other things:
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|
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|
|
the fact that InBev and Mr. Busch IV have negotiated
the terms of a consulting agreement under which Mr. Busch
will provide consulting services in exchange for the payments
and benefits described below;
|
|
|
|
the fact that unvested equity awards, including stock options,
restricted stock and deferred stock units held by
Anheuser-Buschs directors and executive officers, will
become vested upon approval by stockholders of the Merger
Agreement or upon consummation of the Merger, as applicable, and
all these equity awards will be converted into the right to
receive an amount in cash pursuant to the terms of the Merger
Agreement (minus the exercise price, if any);
|
|
|
|
the fact that upon the adoption by stockholders of the Merger
Agreement or upon consummation of the Merger, as applicable,
(i) executive officers will be entitled to pro-rata bonuses
for the current performance period under the Officer Bonus Plan
and (ii) executive officers and directors will be entitled
to accelerated vesting and payment of their accrued benefits and
distribution of their accounts under Anheuser-Buschs
supplemental retirement plans and deferred compensation plans;
|
|
|
|
the fact that certain executive officers will be entitled to
integration bonuses
and/or
enhanced severance payments and benefits in the event of an
involuntary or constructive termination within two years
|
44
|
|
|
|
|
following the closing of the Merger and, in certain
circumstances, a modified
gross-up
payment on amounts that are subject to the excise tax imposed by
Code Section 4999;
|
|
|
|
|
|
the fact that InBev has agreed, after consultation with the
Anheuser-Busch board of directors, to nominate and cause to be
elected following the closing two current or former directors of
Anheuser-Busch (one of whom will be August Busch IV) to the
board of directors of InBev, each of whom will be confirmed for
a three-year term at the first annual general meeting of InBev
following the closing of the Merger (Mr. Busch IV will
become a director of InBev immediately following the
Merger); and
|
|
|
|
the fact that InBev has agreed to provide Anheuser-Buschs
directors and officers with certain rights to indemnification
and insurance.
|
Anheuser-Buschs directors and executive officers have
entered into or participate in, as applicable, the various
agreements and arrangements discussed below. In the case of each
plan or agreement discussed below to which the term change
in control applies, adoption by stockholders of the Merger
Agreement or consummation of the Merger, as applicable, will
constitute a change in control for all purposes under the
applicable Anheuser-Busch Benefit Plans (as that term is defined
in the Merger Agreement). InBev may also seek to enter into
other arrangements with one or more of Anheuser-Buschs
executive officers regarding their ongoing employment with
Anheuser-Busch.
Arrangements
with Executive Officers and Directors of
Anheuser-Busch
Consulting Agreement with Mr. Busch
IV . In connection with the Merger, InBev
and Mr. Busch IV have negotiated the terms of a
consulting agreement (the Consulting Agreement) to
be effective as of the closing of the Merger and continuing
until December 31, 2013 (the Consulting
Period), substantially on the terms described below. In
his role as consultant, it is contemplated that
Mr. Busch IV will, at the request of the CEO of InBev,
provide advice to InBev on Anheuser-Busch new products and new
business opportunities; review Anheuser-Busch marketing
programs; meet with retailers, wholesalers and key advertisers
of Anheuser-Busch; attend North American media events; provide
advice with respect to Anheuser-Buschs relationship with
charitable organizations and the communities in which it
operates; and provide advice on the taste, profile, and
characteristics of the Anheuser-Busch malt-beverage products.
Under the terms of the Consulting Agreement, as contemplated, at
the time of the Merger, Mr. Busch IV will receive a
lump sum cash payment equal to $10,350,000, less any applicable
withholding. During the Consulting Period, it is contemplated
that Mr. Busch IV will be paid a fee of approximately
$120,000 per month. In addition, it is contemplated that
Mr. Busch IV will be provided with an appropriate
office in St. Louis, Missouri, administrative support, and
insured medical, dental, vision and prescription drug benefits
that are materially similar to those provided to full-time
salaried employees of Anheuser-Busch. It is contemplated that he
will also be provided with personal security services through
December 31, 2011 (in St. Louis, Missouri) in
accordance with the Companys past practices including an
income tax gross-up and with complimentary tickets to
Anheuser-Busch-sponsored events. Mr. Busch IV will
also be eligible for a Code Section 280G
gross-up
payment (estimated to be approximately $11.1 million) on
various change in control payments and benefits to which he is
entitled to in connection with the Merger.
It is contemplated that Mr. Busch IV will be subject
to restrictive covenants relating to non-competition and
non-solicitation of employees and customers which will be in
effect for the Consulting Period and a confidentiality covenant.
It is also contemplated that the parties will be subject to a
mutual non-disparagement covenant.
It is contemplated that the Consulting Agreement will be
terminable by either party on sixty days written notice. If
terminated by reason of a notice given by Mr. Busch IV, he
would no longer be entitled to any rights, payments or benefits
under the Consulting Agreement (with the exception of accrued
but unpaid consulting fees, business expense reimbursements, any
Code Section 280G
gross-up
payment, indemnification by InBev, and continued office and
administrative support for 90 days following termination of
the agreement) and the non-compete and non-solicitation
restrictive covenants would survive for two years following
termination of the Consulting Agreement (but not beyond
December 31, 2013). If terminated by reason of a
45
notice given by InBev for any reason other than for
cause, Mr. Busch IV would continue to have
all rights (including the right to payments and benefits)
provided for in the Consulting Agreement and will continue to be
bound by the non-compete and non-solicitation restrictive
covenants through December 31, 2013.
Mr. Busch IV will generally be indemnified by InBev
from and against all claims arising from the performance of his
duties as a consultant during the Consulting Period. In
addition, Mr. Busch IV and InBev will execute a mutual
release of claims regarding all pre-closing matters.
Retention Plan. In connection with the
transaction, Anheuser-Busch and InBev have agreed to establish
an employee retention program providing for integration bonuses
and severance benefits for certain key employees of
Anheuser-Busch. This program will be effective as of the closing
of the Merger and is summarized below.
Integration Bonus. Approximately 60 key
employees of Anheuser-Busch (including Anheuser-Buschs
current executive officers, other than Mr. Busch IV
who will terminate employment with Anheuser-Busch upon the
occurrence of the Merger as described above) will be eligible to
receive an additional bonus for 2008 equal to 40% of the target
bonus otherwise payable to that employee under current
Anheuser-Busch bonus programs. The amount of the additional
bonus will depend upon the extent of achievement of projected
2008 savings under the Blue Ocean program. In
addition, approximately 360 key employees of Anheuser-Busch
(including Anheuser-Buschs current executive officers,
other than Mr. Busch IV) will be eligible to receive
an additional bonus ranging from 80% to 110% of the
employees 2009 target bonus award. The extent to which the
bonus exceeds 80% of the employees 2009 target bonus will
depend on the extent of achievement of the Blue
Ocean operating goals through 2009. In order to qualify
for this integration bonus, the employee generally must be
employed until the date on which annual bonuses for 2009 are
paid in the ordinary course, though an employee who is
involuntarily or constructively terminated after the closing and
prior to the bonus payment will be eligible to receive a
pro-rata payment.
The executive officers will be entitled to the following
estimated integration bonuses under the retention plan assuming
(1) the executive officer continues employment through the
applicable bonus payment date and (2) in the case of the
2009 Integration Bonus, each officers 2009 target bonus is
equal to
his/her 2008
target bonus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental 2008
|
|
|
|
2009 Integration Bonus
|
|
|
2009 Integration Bonus
|
|
|
Bonus
|
|
|
|
(assuming continued
|
|
|
(assuming continued
|
|
|
(assuming continued
|
|
|
|
employment and Blue
|
|
|
employment and
|
|
|
employment and
|
|
|
|
Ocean performance
|
|
|
maximum Blue Ocean
|
|
|
maximum Blue Ocean
|
|
|
|
targets are not
|
|
|
performance targets
|
|
|
performance targets
|
|
Name
|
|
achieved)
|
|
|
are achieved)
|
|
|
are achieved)
|
|
|
W. Randolph Baker
|
|
$
|
542,431
|
|
|
$
|
745,842
|
|
|
$
|
271,215
|
|
Stephen J. Burrows
|
|
$
|
321,360
|
|
|
$
|
441,870
|
|
|
$
|
160,680
|
|
Joseph P. Castellano
|
|
$
|
248,850
|
|
|
$
|
342,169
|
|
|
$
|
124,425
|
|
Marlene V. Coulis
|
|
$
|
147,360
|
|
|
$
|
202,620
|
|
|
$
|
73,680
|
|
John T. Farrell
|
|
$
|
243,000
|
|
|
$
|
334,125
|
|
|
$
|
121,500
|
|
Michael S. Harding
|
|
$
|
235,875
|
|
|
$
|
324,328
|
|
|
$
|
117,938
|
|
Keith M. Kasen
|
|
$
|
290,160
|
|
|
$
|
398,970
|
|
|
$
|
145,080
|
|
Francine I. Katz
|
|
$
|
173,193
|
|
|
$
|
238,140
|
|
|
$
|
86,596
|
|
John F. Kelly
|
|
$
|
282,000
|
|
|
$
|
387,750
|
|
|
$
|
141,000
|
|
Robert C. Lachky
|
|
$
|
216,480
|
|
|
$
|
297,661
|
|
|
$
|
108,240
|
|
Douglas J. Muhleman
|
|
$
|
456,237
|
|
|
$
|
627,326
|
|
|
$
|
228,119
|
|
Michael J. Owens
|
|
$
|
398,520
|
|
|
$
|
547,965
|
|
|
$
|
199,260
|
|
David A. Peacock
|
|
$
|
367,092
|
|
|
$
|
504,752
|
|
|
$
|
183,546
|
|
Anthony T. Ponturo
|
|
$
|
198,223
|
|
|
$
|
272,557
|
|
|
$
|
99,112
|
|
Gary L. Rutledge
|
|
$
|
366,120
|
|
|
$
|
503,415
|
|
|
$
|
183,060
|
|
Thomas W. Santel
|
|
$
|
286,119
|
|
|
$
|
393,414
|
|
|
$
|
143,060
|
|
46
Enhanced Severance. The retention plan also
provides that the same group of approximately 360 employees
(including Anheuser-Buschs current executive officers,
other than Mr. Busch IV) will be eligible for enhanced
severance benefits payable upon an involuntary or constructive
termination of employment within two years following the closing
of the transaction. These severance benefits will range from
15 months of base salary to 2 times the sum of base salary
and target bonus, and will include continuation of medical,
dental, vision, life insurance, prescription drug plan coverage
and other welfare benefits ranging from 15 to 24 months (in
each case, depending on the particular employee category;
executive officers will be eligible for severance ranging from
1.75 to 2 times the sum of base salary and target bonus and
benefits ranging from 21 to 24 months). The retention plan
provides that approximately 60 of these employees (including
Anheuser-Buschs current executive officers, other than
Mr. Busch IV) will, if necessary, be eligible for a
modified
gross-up
payment on amounts that are subject to the excise tax imposed by
Code Section 4999, but only if the total value of all
parachute payments to the individual exceeds 110% of
the individuals safe harbor amount. The
enhanced severance program will also contain customary
restrictive obligations, including an agreement not to compete
with Anheuser-Busch for a period ranging from 12 to
24 months. Constructive termination is defined to include a
material reduction of compensation, a material reduction in
duties and responsibilities from those in effect immediately
prior to closing of the transaction and relocation of more than
50 miles.
The executive officers will be entitled to the following
estimated payments (assuming termination of employment
immediately following the closing of the Merger) pursuant to the
enhanced severance portion of the retention plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Section 280G
|
|
Executive Officers
|
|
Severance Payment
|
|
|
Benefit Continuation
|
|
|
Gross-Up Payment
|
|
|
W. Randolph Baker
|
|
$
|
2,712,153
|
|
|
|
24 months
|
|
|
$
|
0
|
|
Stephen J. Burrows
|
|
$
|
1,874,600
|
|
|
|
24 months
|
|
|
$
|
0
|
|
Joseph P. Castellano
|
|
$
|
1,451,625
|
|
|
|
24 months
|
|
|
$
|
0
|
|
Marlene V. Coulis
|
|
$
|
859,600
|
|
|
|
21 months
|
|
|
$
|
1,100,000
|
|
John T. Farrell
|
|
$
|
1,417,500
|
|
|
|
24 months
|
|
|
$
|
0
|
|
Michael S. Harding
|
|
$
|
1,375,938
|
|
|
|
24 months
|
|
|
$
|
900,000
|
|
Keith M. Kasen
|
|
$
|
1,692,600
|
|
|
|
24 months
|
|
|
$
|
1,300,000
|
|
Francine I. Katz
|
|
$
|
1,010,291
|
|
|
|
21 months
|
|
|
$
|
1,000,000
|
|
John F. Kelly
|
|
$
|
1,645,001
|
|
|
|
24 months
|
|
|
$
|
1,500,000
|
|
Robert C. Lachky
|
|
$
|
1,443,203
|
|
|
|
24 months
|
|
|
$
|
0
|
|
Douglas J. Muhleman
|
|
$
|
2,407,920
|
|
|
|
24 months
|
|
|
$
|
0
|
|
Michael J. Owens
|
|
$
|
2,103,300
|
|
|
|
24 months
|
|
|
$
|
1,600,000
|
|
David A. Peacock
|
|
$
|
1,937,430
|
|
|
|
24 months
|
|
|
$
|
2,300,000
|
|
Anthony T. Ponturo
|
|
$
|
1,321,488
|
|
|
|
24 months
|
|
|
$
|
0
|
|
Gary L. Rutledge
|
|
$
|
1,932,300
|
|
|
|
24 months
|
|
|
$
|
1,200,000
|
|
Thomas W. Santel
|
|
$
|
1,669,028
|
|
|
|
24 months
|
|
|
$
|
0
|
|
Accelerated
Payments under Anheuser-Busch Benefit Plans
Officer Bonus Plan. Pursuant to the terms of
the Officer Bonus Plan, upon the occurrence of a change in
control, all bonuses for the current performance period will be
immediately payable in cash on a pro-rated basis. Under the 2008
officer bonus program, bonus payments will be calculated as
percentages of Anheuser-Buschs adjusted pretax earnings
for the period prior to the Merger. The estimate of bonus
payments set forth in the table below assumes that the Merger is
consummated on November 30, 2008 and is based upon
Anheuser-Buschs projection of its pretax earnings for the
ten-month period ending October 31, 2008. As required by
the bonus plan, pretax earnings have been adjusted to normalize
earnings and therefore the calculation has excluded expenses
associated with Anheuser-Buschs enhanced retirement
program, investment banking, legal and other expenses relating
to the Merger and the potential alternative transactions with a
third
47
party and expenses under executive and director compensation and
retirement programs arising as a result of the Merger.
Supplemental Retirement Plans. Executive
officers participate in the Anheuser-Busch 401(k) Restoration
Plan (the Restoration Plan) and the Anheuser-Busch
Companies, Inc. Supplemental Executive Retirement Plan (the
SERP). The entire value of accounts maintained under
the Restoration Plan will be distributed to participating
executives in a single lump sum within thirty days of the date
of the change in control of Anheuser-Busch. In addition, the
actuarial equivalent of benefits accrued under the SERP will
fully vest and will be paid in a single lump sum within thirty
days of the date of the change in control. With respect to the
SERP, if an executive has otherwise satisfied the eligibility
requirements for early or normal retirement benefits on the date
of the change in control, the amount payable to such executive
is the amount he or she would have been paid in the event of
actual retirement on the change in control date.
Deferred Compensation Plans. Executive
officers of Anheuser-Busch are eligible to participate in the
Anheuser-Busch Executive Deferred Compensation Plan (the
Executive Deferred Compensation Plan) and
non-employee directors of Anheuser-Busch are eligible to
participate in the Anheuser-Busch Companies, Inc. Deferred
Compensation Plan for Non-Employee Directors (the Director
Deferred Compensation Plan). The Executive Deferred
Compensation Plan permits officers to defer salary and bonus
compensation in excess of $200,000 for a specified period of
time or until termination of employment. The Director Deferred
Compensation Plan permits non-employee directors to defer
compensation into cash accounts
and/or
share accounts. The entire amount of participating
officers and directors accounts will be paid to such
individuals in a single lump sum within 30 days of the date
of the change in control.
Excise Tax Gross Ups. In the event that an
excise tax or other special tax is imposed on any payment made
to an executive officer under the Officer Bonus Plan, the
Executive Deferred Compensation Plan, the SERP, or the 401(k)
Restoration Plan due to the change in control, the payment
amount will be increased to cover such tax on a
grossed-up
basis. Such
gross-up
payments are included in, and are not additional to, the
gross-up
payments provided in the Enhanced Severance chart above.
The table below summarizes the value of the estimated payments
that would be received by Anheuser-Buschs executive
officers and directors upon adoption by stockholders of the
Merger Agreement or consummation of the Merger, as applicable,
assuming stockholder approval and consummation of the Merger
occur on November 30, 2008 (other than the amounts
calculated under the 401(k) Restoration Plan and the Deferred
Compensation Plan which are calculated as of August 31,
2008 and may change prior to adoption by stockholders of the
Merger Agreement).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Rata 2008
|
|
|
Value of Accrued
|
|
|
|
|
|
|
|
|
|
Bonus under the
|
|
|
Benefits under the
|
|
|
Value of Accounts
|
|
|
Value of Accounts
|
|
|
|
Officer Bonus
|
|
|
SERP
|
|
|
under the 401(k)
|
|
|
under Deferred
|
|
Name
|
|
Plan
|
|
|
(Vested/Unvested)
|
|
|
Restoration Plan(1)
|
|
|
Compensation Plan(2)
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Randolph Baker
|
|
$
|
2,539,000
|
|
|
$
|
6,980,666/0
|
|
|
$
|
905,349
|
|
|
$
|
9,542,911
|
|
Mark T. Bobak(3)
|
|
|
N/A
|
|
|
$
|
1,304,118/0
|
|
|
|
N/A
|
|
|
$
|
252,426
|
|
Stephen J. Burrows
|
|
$
|
977,000
|
|
|
$
|
3,262,575/0
|
|
|
$
|
611,215
|
|
|
$
|
0
|
|
August A. Busch IV
|
|
$
|
6,000,000
|
|
|
0/$
|
5,682,933
|
|
|
$
|
1,089,429
|
|
|
$
|
0
|
|
Joseph P. Castellano
|
|
$
|
1,172,000
|
|
|
$
|
2,015,294/0
|
|
|
$
|
280,186
|
|
|
$
|
670,009
|
|
Marlene V. Coulis
|
|
$
|
781,000
|
|
|
0/$
|
367,569
|
|
|
$
|
6,378
|
|
|
$
|
0
|
|
John T. Farrell
|
|
$
|
1,172,000
|
|
|
$
|
983,981/0
|
|
|
$
|
102,716
|
|
|
$
|
1,240,948
|
|
Michael S. Harding
|
|
$
|
1,094,000
|
|
|
$
|
2,800,989/0
|
|
|
$
|
164,068
|
|
|
$
|
54,161
|
|
Keith M. Kasen
|
|
$
|
1,367,000
|
|
|
$
|
2,113,619/0
|
|
|
$
|
145,612
|
|
|
$
|
0
|
|
Francine I. Katz
|
|
$
|
879,000
|
|
|
0/$
|
611,954
|
|
|
$
|
134,756
|
|
|
$
|
0
|
|
John F. Kelly
|
|
$
|
1,543,000
|
|
|
0/$
|
1,548,533
|
|
|
$
|
320,502
|
|
|
$
|
1,556,358
|
|
Robert C. Lachky
|
|
$
|
1,133,000
|
|
|
$
|
1,645,998/0
|
|
|
$
|
257,217
|
|
|
$
|
0
|
|
Douglas J. Muhleman
|
|
$
|
2,129,000
|
|
|
0/$
|
3,212,960
|
|
|
$
|
489,163
|
|
|
$
|
0
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Rata 2008
|
|
|
Value of Accrued
|
|
|
|
|
|
|
|
|
|
Bonus under the
|
|
|
Benefits under the
|
|
|
Value of Accounts
|
|
|
Value of Accounts
|
|
|
|
Officer Bonus
|
|
|
SERP
|
|
|
under the 401(k)
|
|
|
under Deferred
|
|
Name
|
|
Plan
|
|
|
(Vested/Unvested)
|
|
|
Restoration Plan(1)
|
|
|
Compensation Plan(2)
|
|
|
Michael J. Owens
|
|
$
|
1,856,000
|
|
|
0/$
|
2,399,163
|
|
|
$
|
359,323
|
|
|
$
|
0
|
|
David A. Peacock
|
|
$
|
1,953,000
|
|
|
0/$
|
734,548
|
|
|
$
|
22,691
|
|
|
$
|
0
|
|
Anthony T. Ponturo
|
|
$
|
1,035,000
|
|
|
$
|
1,911,433/0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Gary L. Rutledge
|
|
$
|
762,000
|
|
|
0/$
|
559,759
|
|
|
$
|
60,228
|
|
|
$
|
0
|
|
Thomas W. Santel
|
|
$
|
1,367,000
|
|
|
0/$
|
1,354,419
|
|
|
$
|
335,432
|
|
|
$
|
1,080,770
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August A. Busch III
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
246,789
|
|
|
$
|
178,228
|
|
Carlos Fernandez(4)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
14,579
|
|
James J. Forese
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
0
|
|
John E. Jacob(5)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
1,038,205
|
|
James R. Jones
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
125,546
|
|
Charles F. Knight(6)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Vernon R. Loucks, Jr.
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
329,270
|
|
Vilma S. Martinez
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
3,422,109
|
|
William Porter Payne
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
305,903
|
|
Joyce M. Roché
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
610,077
|
|
Henry Hugh Shelton
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
110,004
|
|
Patrick T. Stokes
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
0
|
|
|
$
|
187,296
|
|
Andrew C. Taylor
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
170,109
|
|
Douglas A. Warner III
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
201,575
|
|
Edward E. Whitacre, Jr.
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
2,173,068
|
|
|
|
|
(1) |
|
The executives account balances under the 401(k)
Restoration Plan are fully vested and therefore no acceleration
of vesting will occur as a result of the Merger. |
|
(2) |
|
The executives and directors account balances under
the Deferred Compensation Plan are fully vested and therefore no
acceleration of vesting will occur as a result of the Merger. |
|
(3) |
|
Mr. Bobak resigned from Anheuser-Busch in December 2007. |
|
(4) |
|
Mr. Fernandez resigned from the board of directors in June
2008. |
|
(5) |
|
Mr. Jacob retired from the board of directors in April 2008. |
|
(6) |
|
Mr. Knight retired from the board of directors in April
2008. |
Treatment
of Outstanding Equity Awards
Acceleration of Equity Awards. Pursuant to the
terms of Anheuser-Buschs 2008 Long-Term Equity Incentive
Plan for Non-Employee Directors, 2007 Equity and Incentive Plan,
2006 Restricted Stock Plan for Non-Employee Directors, 1998
Incentive Stock Plan, 1989 Incentive Stock Plan, Global Employee
Stock Purchase Plan, the Stock Plan for Non-Employee Directors,
and the Non-Employee Director Elective Stock Acquisition Plan
(the Stock Plans), upon adoption by stockholders of
the Merger Agreement or upon consummation of the Merger, as
applicable, each equity award (including options, restricted
shares, and restricted share units) outstanding under the Stock
Plans will vest and all restrictions will lapse (including
equity awards held by our executive officers and directors).
Cancellation of Equity Awards under the Merger
Agreement. The Merger Agreement provides that at
the consummation of the Merger, each outstanding option to
purchase shares under the Stock Plans will be cancelled and
converted into the right to receive an amount in cash equal to
the product of (x) the total
49
number of shares subject to the option times (y) the excess
of $70.00 over the exercise price per share under the option,
less applicable taxes required to be withheld.
In addition, the Merger Agreement provides that at the
consummation of the Merger, all other equity outstanding awards
will be cancelled and converted into the right to receive an
amount in cash equal to the product of (x) the number of
shares subject to the awards times (y) $70.00, less
applicable taxes required to be withheld.
Assuming a closing date of November 30, 2008, the estimated
aggregate number and value of equity awards held by executive
officers and directors is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Shares of Restricted
|
|
|
Aggregate Value of Equity
|
|
|
|
Unvested Options That Will
|
|
|
Stock and Deferred Stock Units
|
|
|
Awards Payable Upon
|
|
|
|
Accelerate Upon a Change in
|
|
|
That Will Accelerate Upon a
|
|
|
Consummation of Merger
|
|
|
|
Control
|
|
|
Change in Control
|
|
|
(Vested and Unvested)
|
|
Name
|
|
(#/$)*
|
|
|
(#/$)*
|
|
|
($)*
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Randolph Baker
|
|
200,339/$
|
3,953,775
|
|
|
20,306/$
|
1,421,420
|
|
|
$
|
50,206,103
|
|
Mark T. Bobak(1)
|
|
199,878/$
|
3,942,882
|
|
|
18,585/$
|
1,300,950
|
|
|
$
|
27,322,957
|
|
Stephen J. Burrows
|
|
89,535/$
|
1,772,754
|
|
|
11,342/$
|
793,940
|
|
|
$
|
24,584,740
|
|
August A. Busch IV(2)
|
|
762,346/$
|
15,167,644
|
|
|
67,847/$
|
4,749,290
|
|
|
$
|
88,638,310
|
|
Joseph P. Castellano
|
|
86,110/$
|
1,691,822
|
|
|
8,324/$
|
582,680
|
|
|
$
|
16,410,830
|
|
Marlene V. Coulis
|
|
46,649/$
|
922,265
|
|
|
5,098/$
|
356,860
|
|
|
$
|
4,179,466
|
|
John T. Farrell
|
|
70,351/$
|
1,319,437
|
|
|
1,273/$
|
89,110
|
|
|
$
|
9,927,803
|
|
Michael S. Harding
|
|
81,214/$
|
1,599,368
|
|
|
5,175/$
|
362,250
|
|
|
$
|
12,111,397
|
|
Keith M. Kasen
|
|
99,631/$
|
1,955,593
|
|
|
10,639/$
|
744,730
|
|
|
$
|
15,079,998
|
|
Francine I. Katz
|
|
53,510/$
|
1,056,956
|
|
|
6,288/$
|
440,160
|
|
|
$
|
12,216,182
|
|
John F. Kelly
|
|
98,188/$
|
1,937,784
|
|
|
10,630/$
|
744,100
|
|
|
$
|
23,583,064
|
|
Robert C. Lachky
|
|
66,500/$
|
1,314,180
|
|
|
4,565/$
|
319,550
|
|
|
$
|
19,516,815
|
|
Douglas J. Muhleman
|
|
174,549/$
|
3,400,192
|
|
|
16,815/$
|
1,177,050
|
|
|
$
|
38,454,580
|
|
Michael J. Owens
|
|
155,109/$
|
3,017,034
|
|
|
14,628/$
|
1,023,960
|
|
|
$
|
26,559,998
|
|
David A. Peacock
|
|
117,860/$
|
2,270,595
|
|
|
5,429/$
|
380,030
|
|
|
$
|
8,727,308
|
|
Anthony T. Ponturo
|
|
59,850/$
|
1,184,480
|
|
|
7,131/$
|
499,170
|
|
|
$
|
14,603,865
|
|
Gary L. Rutledge
|
|
31,673/$
|
631,834
|
|
|
3,302/$
|
231,140
|
|
|
$
|
8,217,815
|
|
Thomas W. Santel
|
|
102,647/$
|
2,013,999
|
|
|
9,358/$
|
655,060
|
|
|
$
|
24,128,101
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
August A. Busch III(3)
|
|
3,333/$
|
68,543
|
|
|
9,275/$
|
649,250
|
|
|
$
|
103,594,266
|
|
Carlos Fernandez(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
James J. Forese
|
|
4,999/$
|
110,443
|
|
|
2,913/$
|
203,910
|
|
|
$
|
741,935
|
|
John E. Jacob(5)
|
|
|
0
|
|
|
859/$
|
60,130
|
|
|
$
|
28,286,916
|
|
James R. Jones
|
|
4,999/$
|
110,443
|
|
|
2,939/$
|
205,730
|
|
|
$
|
1,252,080
|
|
Charles F. Knight(6)
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1,046,350
|
|
Vernon R. Loucks, Jr.
|
|
4,999/$
|
110,443
|
|
|
2,939/$
|
205,730
|
|
|
$
|
1,252,080
|
|
Vilma S. Martinez
|
|
4,999/$
|
110,443
|
|
|
2,913/$
|
203,910
|
|
|
$
|
1,250,260
|
|
William Porter Payne
|
|
4,999/$
|
110,443
|
|
|
2,939/$
|
205,730
|
|
|
$
|
1,252,080
|
|
Joyce M. Roché
|
|
4,999/$
|
110,443
|
|
|
2,939/$
|
205,730
|
|
|
$
|
1,252,080
|
|
Henry Hugh Shelton
|
|
4,999/$
|
110,443
|
|
|
2,939/$
|
205,730
|
|
|
$
|
961,385
|
|
Patrick T. Stokes
|
|
3,333/$
|
68,543
|
|
|
15,885/$
|
1,111,950
|
|
|
$
|
140,767,807
|
|
Andrew C. Taylor
|
|
4,999/$
|
110,443
|
|
|
2,913/$
|
203,910
|
|
|
$
|
1,250,260
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Shares of Restricted
|
|
|
Aggregate Value of Equity
|
|
|
|
Unvested Options That Will
|
|
|
Stock and Deferred Stock Units
|
|
|
Awards Payable Upon
|
|
|
|
Accelerate Upon a Change in
|
|
|
That Will Accelerate Upon a
|
|
|
Consummation of Merger
|
|
|
|
Control
|
|
|
Change in Control
|
|
|
(Vested and Unvested)
|
|
Name
|
|
(#/$)*
|
|
|
(#/$)*
|
|
|
($)*
|
|
|
Douglas A. Warner III
|
|
4,999/$
|
110,443
|
|
|
2,939/$
|
205,730
|
|
|
$
|
1,252,080
|
|
Edward E. Whitacre, Jr.
|
|
4,999/$
|
110,443
|
|
|
2,939/$
|
205,730
|
|
|
$
|
826,110
|
|
|
|
|
* |
|
The value of the stock option awards is equal to (a) the
product of the number of shares underlying the award and $70
minus (b) the aggregate exercise price. The value of the
restricted stock awards and deferred stock unit awards is equal
to the product of the number of shares subject to the award and
$70. |
|
(1) |
|
Mr. Bobak resigned from Anheuser-Busch in December 2007. |
|
(2) |
|
Amount does not include 50,000 vested options transferred to
Mr. Busch IV by Mr. Busch III. |
|
(3) |
|
Amount includes 100,0000 transferred, vested options (50,000 of
which were transferred to Mr. Busch IV). |
|
(4) |
|
Mr. Fernandez resigned from the board of directors in June
2008. |
|
(5) |
|
Mr. Jacob resigned from the board of directors in April
2008. |
|
(6) |
|
Mr. Knight resigned from the board of directors in April
2008. |
Indemnification
and Insurance
Prior to the effective time of the Merger, Anheuser-Busch will,
and if Anheuser-Busch is unable to, InBev will cause the
surviving corporation to, obtain and fully pay for
tail insurance policies with a claims period of at
least six years from and after the effective time of the Merger
from an insurance carrier with the same or better credit rating
as Anheuser-Buschs current insurance carrier with respect
to directors and officers liability insurance and
fiduciary liability insurance (collectively, D&O
Insurance), for the persons who, as of the date of the
Merger Agreement, were covered by Anheuser-Buschs existing
D&O Insurance, with terms, conditions, retentions and
levels of coverage at least as favorable as
Anheuser-Buschs existing D&O Insurance with respect
to matters existing or occurring at or prior to the effective
time of the Merger (including in connection with the Merger
Agreement or the transactions or actions contemplated thereby).
If Anheuser-Busch and the surviving corporation for any reason
fail to obtain such tail insurance policies, InBev
has agreed to cause the surviving corporation to continue to
maintain in effect Anheuser-Buschs current
D&O Insurance, at no expense to the beneficiaries, for
a period of at least six years from and after the effective time
of the Merger. If such insurance is unavailable, InBev has
agreed to cause the surviving corporation to purchase the best
available D&O Insurance for such six-year period from an
insurance carrier with the same or better credit rating as
Anheuser-Buschs current insurance carrier with respect to
Anheuser-Buschs existing D&O Insurance with terms,
conditions, retentions and with levels of coverage at least as
favorable as provided in Anheuser-Buschs existing policies
as of the date of the Merger Agreement. In no event will InBev
or the surviving corporation be required to expend an annual
premium amount in excess of 300% of the annual premiums
currently paid by Anheuser-Busch for such insurance; if the
annual premiums of such insurance coverage exceed that amount,
the surviving corporation is required to obtain a policy with
the greatest coverage available for a cost not exceeding such
amount.
Following the effective time of the Merger, InBev and the
surviving corporation will indemnify, defend and hold harmless
each present and former director and officer of Anheuser-Busch
or any of its subsidiaries and any fiduciary under any
Anheuser-Busch benefit plan (the indemnified
parties), and will also promptly advance expenses as
incurred, against any costs or expenses (including
attorneys fees and disbursements), judgments, fines,
losses, claims, damages or liabilities incurred in connection
with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative,
arising out of or pertaining to the fact that the indemnified
party is or was an officer, director, employee or fiduciary of
Anheuser-Busch or any of its subsidiaries or a fiduciary under
any Anheuser-Busch benefit plan, whether asserted or claimed
prior to, at or after the effective time of the Merger
(including with respect to any acts or omissions in connection
with the Merger Agreement and the transactions and actions
contemplated thereby), to the fullest
51
extent permitted under Delaware law and our certificate of
incorporation or bylaws and any indemnification agreement in
effect on the date of the Merger Agreement. Any determination
required to be made with respect to whether an officers or
directors conduct complied with the standards set forth
under Delaware law and our certificate of incorporation and
bylaws will be made by independent counsel selected by the
indemnified party. In the event of any claim, action, suit,
proceeding or investigation, (x) neither InBev nor the
surviving corporation may settle, compromise or consent to the
entry of any judgment in any claim, action, suit, proceeding or
investigation, unless such settlement, compromise or consent
includes an unconditional release of the indemnified party from
all liability arising out of such claim, action, suit,
proceeding or investigation or the indemnified party otherwise
consents, and (y) the surviving corporation will cooperate
in the defense of such matter.
Additionally, the charter and bylaws of the surviving
corporation must contain provisions no less favorable with
respect to indemnification of and advancement of expenses to
individuals who were directors and officers prior to the
effective time of the Merger than those contained in our
certificate of incorporation and bylaws as of the date of the
Merger Agreement, and such provisions may not be amended,
repealed or otherwise modified for a period of six years from
the effective time of the Merger in any manner that would
adversely affect the rights of any indemnified party.
The rights of the indemnified parties under the Merger Agreement
are in addition to any rights such indemnified parties may have
under the certificate of incorporation or bylaws of
Anheuser-Busch or any of its subsidiaries, or under any
applicable contracts or laws. InBev has agreed to honor and
perform under all indemnification agreements entered into by
Anheuser-Busch or any of its subsidiaries.
Each of Anheuser-Buschs directors and executive officers
is party to an indemnification agreement with Anheuser-Busch
which provides indemnitees with, among other things, certain
indemnification and advancement rights in third-party
proceedings, proceedings by or in the right of Anheuser-Busch,
proceedings in which the indemnitee is wholly or partly
successful, and for an indemnitees expenses incurred as a
witness in a proceeding by reason of his or her corporate
status. In the event of a potential change of control of
Anheuser-Busch, each of the directors and executive officers has
the right to request that Anheuser-Busch fund a trust in an
amount sufficient to satisfy any and all expenses reasonably
anticipated at the time of request to be incurred in connection
with investigating, preparing for and defending any claim
relating to an indemnifiable event, and any and all judgments,
fines, penalties and settlement amounts of any and all claims
relating to an indemnifiable event from time to time actually
paid or claimed, reasonably anticipated or proposed to be paid.
Material
U.S. Federal Income Tax Consequences of the Merger to Our
Stockholders
The following discussion is a summary of the material
U.S. federal income tax consequences of the Merger to
U.S. holders (as defined below) of
Anheuser-Busch common stock whose shares are converted into the
right to receive cash in the Merger. This summary is based on
the provisions of the Internal Revenue Code of 1986, as amended
(the Code), U.S. Treasury regulations
promulgated thereunder, judicial authorities and administrative
rulings, all as in effect as of the date of the proxy statement
and all of which are subject to change, possibly with
retroactive effect.
For purposes of this discussion, the term
U.S. holder means a beneficial owner of shares
of our common stock that is, for U.S. federal income tax
purposes:
|
|
|
|
|
an individual who is a citizen or resident of the United States;
|
|
|
|
a corporation (including any entity treated as a corporation for
U.S. federal income tax purposes) created or organized
under the laws of the United States, any state thereof, or the
District of Columbia;
|
|
|
|
a trust that (i) is subject to the supervision of a court
within the United States and the control of one or more
U.S. persons or (ii) has a valid election in effect
under applicable U.S. Treasury regulations to be treated as
a U.S. person; or
|
|
|
|
an estate the income of which is subject to U.S. federal
income tax regardless of its source.
|
52
Holders of our common stock who are not U.S. holders may be
subject to different tax consequences than those described below
and are urged to consult their tax advisors regarding their tax
treatment under U.S. and
non-U.S. tax
laws.
The following does not purport to consider all aspects of
U.S. federal income taxation of the Merger that might be
relevant to U.S. holders in light of their particular
circumstances, or those U.S. holders that may be subject to
special rules (for example, dealers in securities or currencies,
brokers, banks, financial institutions, insurance companies,
mutual funds, tax-exempt organizations, stockholders subject to
the alternative minimum tax, partnerships (or other flow-through
entities and their partners or members), persons whose
functional currency is not the U.S. dollar, stockholders
who hold our stock as part of a hedge, straddle, constructive
sale or conversion transaction or other integrated investment,
stockholders that acquired our common stock pursuant to the
exercise of an employee stock option or otherwise as
compensation, or U.S. holders who have perfected and not
withdrawn a demand for statutory appraisal rights), nor does it
address the U.S. federal income tax consequences to
U.S. holders that do not hold our common stock as
capital assets within the meaning of
Section 1221 of the Code (generally, property held for
investment). In addition, the discussion does not address any
aspect of foreign, state, local, estate, gift or other tax law
that may be applicable to a U.S. holder.
The tax consequences to stockholders that hold our common stock
through a partnership or other pass-through entity generally
will depend on the status of the stockholder and the activities
of the partnership. Partners in a partnership or other
pass-through entity holding our common stock should consult
their tax advisors.
This summary of certain material U.S. federal income tax
consequences is for general information only and is not tax
advice. Holders are urged to consult their tax advisors with
respect to the application of U.S. federal income tax laws
to their particular situations as well as any tax consequences
arising under the U.S. federal estate or gift tax rules, or
under the laws of any state, local, foreign or other taxing
jurisdiction or under any applicable tax treaty.
Exchange of Shares of Common Stock for Cash Pursuant to the
Merger Agreement. The receipt of cash in exchange
for shares of our common stock pursuant to the Merger will be a
taxable transaction for U.S. federal income tax purposes.
In general, a U.S. holder whose shares of common stock are
converted into the right to receive cash in the Merger will
recognize capital gain or loss for U.S. federal income tax
purposes in an amount equal to the difference, if any, between
the amount of cash received with respect to such shares and the
stockholders adjusted tax basis in such shares. Gain or
loss will be determined separately for each block of shares
(i.e., shares acquired at the same cost in a single transaction)
surrendered for cash pursuant to the Merger. Such gain or loss
will be long-term capital gain or loss provided that a
stockholders holding period for such shares is more than
12 months at the time of the consummation of the Merger.
Long-term capital gains of non-corporate U.S. holders,
including individuals, recognized in taxable years beginning
before January 1, 2011 are generally taxed at a maximum
rate of 15%. Short-term capital gains are taxed at ordinary
income rates.
Backup Withholding and Information
Reporting. A U.S. holder may be subject to
backup withholding at the applicable rate (currently
28 percent) on the cash payments to which such
U.S. holder is entitled pursuant to the Merger, unless the
U.S. holder properly establishes an exemption or provides a
taxpayer identification number and otherwise complies with the
backup withholding rules. Each U.S. holder should complete
and sign the substitute IRS
Form W-9
included as part of the letter of transmittal and return it to
the paying agent in order to provide the information and
certification necessary to avoid backup withholding, unless an
applicable exemption applies and is established in a manner
satisfactory to the paying agent. Backup withholding is not an
additional tax. Any amounts withheld under the backup
withholding rules generally will be allowable as a refund or a
credit against a U.S. holders U.S. federal
income tax liability provided the required information is timely
furnished to the IRS.
Regulatory
Approvals
Under the HSR Act and the rules promulgated thereunder by the
FTC, the Merger cannot be completed until Anheuser-Busch and
InBev each file a notification and report form under the HSR Act
and the applicable
53
waiting period has expired or been terminated. On July 15,
2008, InBev filed, and on July 18, 2008, Anheuser-Busch
filed, notification and report forms under the HSR Act with the
FTC and the Antitrust Division of the DOJ. On August 18,
2008, Anheuser-Busch and InBev received a request for additional
information, commonly referred to as a second
request, from the Antitrust Division of the DOJ under the
HSR Act. The effect of the second request is to extend the
waiting period imposed by the HSR Act. The applicable waiting
period under the HSR Act has not yet expired or been terminated.
At any time before or after consummation of the Merger,
notwithstanding the termination of the waiting period under the
HSR Act, the Antitrust Division of the DOJ or the FTC could take
such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin
the consummation of the Merger or seeking divestiture of
substantial assets of Anheuser-Busch or InBev. At any time
before or after the consummation of the Merger, and
notwithstanding the termination of the waiting period under the
HSR Act, any state could take such action under antitrust laws
as it deems necessary or desirable in the public interest. Such
action could include seeking to enjoin the consummation of the
Merger or seeking divestiture of substantial assets of
Anheuser-Busch or InBev. Private parties may also seek to take
legal action under antitrust laws under certain circumstances.
On September 10, 2008, an application for injunctive relief
was filed on behalf of a group of beer consumers in the United
States District Court for the Eastern District of Missouri
alleging that the Merger violates Section 7 of the Clayton
Antitrust Act. The complaint seeks to prohibit the Merger and
also seeks attorneys fees.
In addition, the Merger is subject to various foreign antitrust
laws. To the extent required, Anheuser-Busch and InBev have
filed or intend to file notifications in certain
non-U.S. jurisdictions. These jurisdictions are Argentina,
Bosnia and Herzegovina, Brazil, China, Germany, Mexico,
Montenegro, Serbia, the United Kingdom and Uruguay. Some of
these jurisdictions do not require regulatory approval, consent
or agreement prior to completing the Merger. If this is not the
case, Anheuser-Busch and InBev expect to observe the applicable
waiting periods prior to completing the Merger.
Argentina. Under the Antitrust Law N°
25,156 (as modified by Legislative Decree N° 396/2001 and
implemented by Regulatory Decree N° 89/2001 and Resolution
N° 40/2001), Anheuser-Busch and InBev must file a
notification to the National Commission for Competition Defence
(CNOC). Anheuser-Busch and InBev are currently
preparing a notification to the CNDC. The CNDC will review the
Merger once the notification has been made and make any
necessary recommendations to the Secretary of Interior Commerce
(SIC) with respect to the adoption of a decision
concerning the Merger. The SIC can take such action under the
antitrust laws as it deems necessary or desirable, including
conditioning its approval of the Merger upon the observance of
certain terms and conditions. The Merger can be completed prior
to the approval of the CNDC. However, the Argentine portion of
the Merger cannot be consummated until approval by the CNDC or
expiry of the applicable waiting period.
Bosnia and Herzegovina. Under the Competition
law of Bosnia and Herzegovina, the Merger cannot be completed
until the Competition Council of Bosnia and Herzegovina
(Council) has approved the Merger or the applicable
waiting period has expired. On August 12, 2008, InBev filed
a request for a waiver of the obligation to file with the
Council. The Council can accept the request or take such action
under the antitrust laws as it deems necessary or desirable,
including conditioning its approval of the Merger upon the
observance of certain terms and conditions.
Brazil. Under law 8884, the Merger must be
approved by the Brazilian Antitrust Commission
(CADE). On August 1, 2008, Anheuser-Busch and
InBev filed a notification with CADE. An unconditional clearance
decision was issued by CADE on September 17, 2008.
China. Under the Anti-Monopoly law (the
AML) and the regulations promulgated thereunder, the
Merger cannot be completed until InBev files a notification
under the AML and the applicable review period has expired.
InBev has indicated that it expects to file a notification with
the Ministry of Commerce (MOC) in October of 2008.
The MOC can take such action under the antitrust laws as it
deems necessary or desirable, including conditioning its
approval of the Merger upon the observance of certain terms and
conditions.
Germany. Under Chapter VII of the Act
against Restraints of Competition, the Merger cannot be
completed until Anheuser-Busch and InBev file a notification to
the Federal Cartel Office (FCO) and the
54
applicable waiting period has expired or been terminated. On
August 7, 2008, Anheuser-Busch and InBev filed a
notification to the FCO and on August 20, 2008, an
unconditional clearance decision was issued by the FCO.
Mexico. Under the Federal law on Economic
Competition (ley Federal de Competencia Economica;) (the
FLEC), and the regulations thereof, the Merger
cannot be completed until Anheuser-Busch and InBev file a
notification to the Federal Competition Commission (the
CFC) and the applicable waiting period has expired.
On September 17, 2008, Anheuser-Busch and InBev filed a
notification to the CFC. The CFC may take such action under the
FLEC as it deems necessary or desirable, including conditioning
its approval of the Merger upon the observance of certain terms
and conditions.
Montenegro. Under the Competition law of the
Republic of Montenegro, the Merger cannot be completed until the
Competition Authority of the Republic of Montenegro (the
Authority) approves the Merger or until the
applicable waiting period expires. On August 12, 2008,
InBev filed a request for a waiver of the obligation to file
with the Authority. The Authority can accept the request or take
such action under the antitrust laws as it deems necessary or
desirable, including conditioning its approval of the Merger
upon the observance of certain terms and conditions.
Serbia. Under the Competition law of the
Republic of Serbia, the Merger cannot be completed until the
Competition Commission of the Republic of Serbia (the
Commission) approves the Merger or the applicable
waiting period expires. On August 12, 2008, InBev filed a
request for a waiver of the obligation to file with the
Commission. An unconditional clearance decision was issued by
the Serbian authority on September 12, 2008.
United Kingdom. Under the Enterprise Act 2002
(the EA), a merger that meets the applicable
thresholds can be notified voluntarily to the Office of Fair
Trading (the OFT) for approval. The relevant merger
can be referred to the Competition Commission (the
CoCo) for a more detailed substantive review. The
OFT has a duty to refer mergers to the CoCo where it believes
that there is, or may be, a relevant merger situation that has
resulted or may be expected to result in a substantial lessening
of competition in the UK. InBev filed a voluntary notification
to the OFT on August 26, 2008. The Merger can be
consummated during the OFTs review. However, following
closing but prior to a decision as to whether to refer a
completed merger to the CoCo, the OFT can require
hold-separate-type undertakings or impose orders to prevent
action that might prejudice a referral of the Merger by the
CoCo. If a referral is made to the CoCo prior to consummation of
the Merger, the Merger cannot be consummated except with the
CoCos consent. The OFT or the CoCo, as the case may be,
can take such action under the antitrust laws as it deems
necessary or desirable, including conditioning its approval of
the Merger upon the observance of certain terms and conditions.
Uruguay. Under the Act 18.159 (Antitrust
Act) and Decree 404/007, a notification or notice, as the
case may be, must be filed with the Antitrust Commission
depending on the circumstances of the case. Anheuser-Busch and
InBev are currently preparing a notice to the Antitrust
Commission regarding the Merger. The Merger does not require the
approval, consent or agreement of the Antitrust Commission.
While there can be no assurance that the Merger will not be
challenged by a governmental authority or private party on
antitrust grounds, Anheuser-Busch, based on a review of
information provided by InBev relating to the businesses in
which it and its affiliates are engaged, believes that the
Merger can be effected in compliance with federal, state and
foreign antitrust laws. The term antitrust laws
means the Sherman Act, as amended, the Clayton Act, as amended,
the HSR Act, the Federal Trade Commission Act, as amended, and
all other Federal, state and foreign statutes, rules,
regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade.
Delisting
and Deregistration of Common Stock
If the Merger is completed, our common stock will be delisted
from the NYSE and deregistered under the Exchange Act and we
will no longer file periodic reports with the SEC on account of
our common stock.
55
Litigation
Related to the Merger
Missouri
Suits
On June 4, 2008 and July 16, 2008, two substantially
similar putative shareholder class and derivative actions were
filed in the Circuit Court of the City of St. Louis,
Missouri against Anheuser-Buschs board of directors and
Anheuser-Busch (in part as nominal defendant), styled as
Pick v. Busch, et al., C.A.
No. 0822-CC02134,
and New Jersey Carpenters Pension and Annuities Funds v.
Busch, et al., C.A.
No. 0822-CC07280.
These plaintiffs alleged that the defendants breached their
fiduciary duties by failing to give adequate consideration to
the InBev non-binding proposal and taking improper defensive
actions against the offer in an attempt to maintain their
positions on Anheuser-Buschs board of directors. The
plaintiffs generally sought declaratory relief that the
defendants breached their fiduciary duties, injunctive relief to
prevent such breaches
and/or fees
and expenses. On July 2, 2008, a different plaintiff filed
an action with similar allegations in United Stated District
Court for the Eastern District of Missouri, styled as United
Food & Commercial Workers Pension Fund of Northeastern
PA v. Anheuser-Busch Companies, Inc., et al.,
C.A. 4:08-cv-00968.
The plaintiff in the federal action sought damages in addition
to the other forms of relief sought in the state actions.
The plaintiffs in the Missouri state court actions filed a
motion to consolidate those two cases and for the appointment of
lead counsel on June 26, 2008 and a motion for expedited
discovery on June 30, 2008. Anheuser-Busch filed motions to
stay the two Missouri state actions in favor of the
substantially similar lawsuits pending in the Delaware Court of
Chancery on June 27, 2008. On July 2, 2008, the
Circuit Court of the City of St. Louis held a hearing on
these motions and, on July 7, 2008, granted
Anheuser-Buschs motion to stay the two Missouri state
actions in favor of substantially similar Delaware actions,
which are described below. The Circuit Court also ruled that the
plaintiffs motion to consolidate the Missouri actions and
motion for expedited discovery were moot. On July 11, 2008,
the plaintiffs filed a motion to lift the stay and
Anheuser-Busch filed an opposition brief on July 18, 2008.
On July 21, 2008, the court removed the motion to lift the
stay from its hearing docket, to be reset on application.
On July 30, 2008, a putative shareholder class and
derivative action styled Man Foon Shiu v. Busch, et
al., C.A.
No. 4:2008-CV-1119
CDP, was filed against Anheuser-Buschs board of directors,
Anheuser-Busch (in part as nominal defendant), Pestalozzi
Acquisition Corp. and InBev NV/SA in United States District
Court for the Eastern District of Missouri. The plaintiff in the
Shiu action alleged that the board of directors had
breached its fiduciary duties by failing to maximize shareholder
value by agreeing to sell the Company through an unfair process
and for an unfair price, and claimed that InBev had aided and
abetted the board of directors in agreeing to do so. The
plaintiff generally sought declaratory relief that the board of
directors breached its fiduciary duties, injunctive relief to
prevent such breaches
and/or fees
and expenses.
On August 21, 2008, the plaintiff filed an amended
complaint, again claiming that the board of directors breached
its fiduciary duties by agreeing to sell Anheuser-Busch through
an unfair process and for an unfair price, and also that the
board of directors breached its fiduciary duties by making
materially inadequate disclosures and omissions in
Anheuser-Buschs Preliminary Proxy Statement filed with the
SEC on August 15, 2008. On September 4, 2008,
plaintiff filed a motion for expedited proceedings and a motion
to expedite discovery. Both motions were denied by the court the
same day.
On September 5, 2008, a putative shareholder derivative
action styled Hoops v. Busch, et al., C.A.
No. 0822-CC-08637,
was filed against Anheuser-Buschs board of directors and
Anheuser-Busch (in part as nominal defendant) in the Circuit
Court for the City of St. Louis, Missouri. The plaintiff in
the Hoops action alleged that the board of directors breached
its fiduciary duties by (i) failing to immediately appoint
a special committee of independent directors to consider the
InBev non-binding proposal; (ii) delaying the acceptance of
the InBev non-binding proposal and/or the closing of the Merger
in order to obtain additional compensation for themselves;
(iii) securing positions for themselves at the combined
company resulting from the Merger, as well as other awards,
benefits, and additional compensation for themselves beyond what
was originally offered; and (iv) failing to set a final
closing date for the Merger. The plaintiff generally sought both
injunctive relief and compensatory damages, and fees and
expenses.
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On September 10, 2008, an action brought under
Section 16 of the Clayton Antitrust Act styled Ginsburg
et al. v. InBev NV/SA et al., C.A.
No. 08-1375,
was filed against Anheuser-Busch in the United States District
Court for the Eastern District of Missouri. The plaintiffs in
the Ginsburg action allege that the Merger will have
certain anticompetitive effects and consequences on the beer
industry and will create a monopoly in the production and sale
of beer in the United States. The plaintiffs generally seek
declaratory relief that the Merger violates Section 7 of
the Clayton Antitrust Act, injunctive relief to prevent
consummation of the merger and fees and expenses.
Delaware
Shareholder Suits
Between June 12, 2008 and July 2, 2008, a total of 11
substantially similar putative shareholder class and derivative
actions were filed in the Delaware Court of Chancery against
Anheuser-Buschs board of directors and Anheuser-Busch (in
part as a nominal defendant), alleging that the defendants
breached their fiduciary duties by failing to maximize
shareholder value and adopting unreasonable defensive measures
in the face of the InBev non-binding proposal, including
undertaking merger negotiations with Grupo Modelo. The
plaintiffs generally sought declaratory relief that the
defendants breached their fiduciary duties, injunctive relief to
prevent such breaches, damages,
and/or fees
and expenses.
On June 18, 2008 and June 24, 2008, the plaintiffs in
two of these actions moved for expedited discovery. The Court
denied both motions. On June 25, 2008, one of the
plaintiffs filed an Order of Dismissal seeking a voluntary
dismissal of its action without prejudice. On July 10,
2008, the court consolidated the remaining ten actions under the
caption In re Anheuser-Busch Companies, Inc. Shareholders
Litigation, C.A. No. 3851, appointed the following as
lead plaintiffs: Deka International S.A. Luxemburg,
International Fund Management S.A. Luxemburg, Helaba Invest
Kapitalanlagegesellschaft MBH, Deka Inestmentgesellschaft MBH,
Deka Fundmaster Investmentgesellschaft MBH, the General
Retirement System of the City of Detroit, and Sjunde AP-Fonden.
The court further ordered the lead plaintiffs to file a
consolidated amended derivative and class action complaint and
that the defendants need not respond to any of the previously
filed-complaints. The lead plaintiffs have not yet filed their
consolidated amended complaint.
Modelo
Arbitration
Anheuser-Busch International Holdings, Inc. (ABIH)
has received a letter from the attorney representing both Grupo
Modelo S.A.B. de C.V. and the Series A shareholders of
Grupo Modelo S.A.B. de C.V. The letter notifies ABIH that Grupo
Modelo S.A.B. de C.V. and the Series A shareholders plan to
file a notice of arbitration shortly with respect to the
previously disclosed claims that consummation of the transaction
between Anheuser-Busch and InBev would violate provisions of the
Investment Agreement, unless consented to by them. ABIH has
informed Grupo Modelo S.A.B. de C.V. and its Series A
shareholders that it believes such claims are entirely without
merit, and that ABIH will vigorously contest such claims.
Anheuser-Busch believes that the arbitration proceeding will
have no impact on the completion of the transaction with InBev.
57
THE
MERGER AGREEMENT
The summary of the material terms of the Merger Agreement
below and elsewhere in this proxy statement is qualified in its
entirety by reference to the Merger Agreement, a copy of which
is attached to this proxy statement as Annex A and which we
incorporate by reference into this document. This summary does
not purport to be complete and may not contain all of the
information about the Merger Agreement that is important to you.
We encourage you to carefully read the Merger Agreement in its
entirety.
The Merger Agreement has been included to provide you with
information regarding its terms. It is not intended to provide
any other factual information about Anheuser-Busch, InBev or
Merger Sub. Such information can be found elsewhere in this
proxy statement and in the other public filings Anheuser-Busch
makes with the SEC, which are available without charge at
www.sec.gov.
The representations, warranties and covenants contained in
the Merger Agreement were made only for purposes of the Merger
Agreement and as of a specific date and may be subject to more
recent developments, were solely for the benefit of the parties
to the Merger Agreement, may be subject to limitations agreed
upon by the contracting parties, including being qualified by
confidential disclosures made for the purposes of allocating
risk between parties to the Merger Agreement instead of
establishing these matters as facts, and may apply standards of
materiality in a way that is different from what may be viewed
as material by you or by other investors. For the foregoing
reasons, you should not rely on the representations, warranties
and covenants or any descriptions thereof as characterizations
of the actual state of facts or condition of Anheuser-Busch,
InBev or Merger Sub or any of their respective subsidiaries or
affiliates.
The
Merger
The Merger Agreement provides for the Merger of Merger Sub with
and into Anheuser-Busch upon the terms, and subject to the
conditions, of the Merger Agreement. As the surviving
corporation, Anheuser-Busch will continue to exist following the
Merger as an indirect wholly-owned subsidiary of InBev. Upon
consummation of the Merger, the directors of Merger Sub will be
the initial directors of the surviving corporation and the
officers of Anheuser-Busch will be the initial officers of the
surviving corporation.
We or InBev may terminate the Merger Agreement prior to the
consummation of the Merger in some circumstances, whether before
or after the adoption by our stockholders of the Merger
Agreement. Additional details on the parties ability to
terminate the Merger Agreement are described in
Termination of the Merger Agreement
beginning on page 69.
Effective
Time
The Merger will be effective at the time the certificate of
merger is filed with the Secretary of State of the State of
Delaware or such later time as agreed by the parties to the
Merger Agreement in writing and specified in the certificate of
merger. We expect to complete the Merger as soon as practicable
after our and InBevs stockholders adopt the Merger
Agreement and all other conditions to closing have been
satisfied or waived.
Unless otherwise agreed by the parties to the Merger Agreement,
the parties are required to close the Merger no later than the
third business day after the satisfaction or waiver of the
conditions described under Conditions to the Merger
beginning on page 68.
Merger
Consideration
Each share of our common stock issued and outstanding
immediately prior to the effective time of the Merger will be
converted into the right to receive $70.00 in cash, without
interest and less any applicable withholding taxes, other than
the following shares:
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owned by InBev, Merger Sub or any other direct or indirect
wholly owned subsidiary of InBev (other than shares of common
stock held on behalf of third parties);
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owned by Anheuser-Busch or any direct or indirect wholly owned
subsidiary of Anheuser-Busch (other than shares of common stock
held on behalf of third parties); and
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owned by stockholders who have perfected and not withdrawn a
demand for appraisal rights pursuant to Section 262 of the
DGCL.
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After the effective time of the Merger, each holder of any
shares of our common stock (other than shares for which
appraisal rights have been properly demanded and perfected and
not withdrawn) will no longer have any rights with respect to
the shares, except for the right to receive the merger
consideration. See Dissenters Rights of
Appraisal beginning on page 78.
Treatment
of Options and Other Awards
Anheuser-Busch Stock Options. At the effective
time of the Merger, each outstanding option to acquire our
common stock under equity incentive plans, vested or unvested,
will be cancelled and converted into the right to receive within
3 business days following the Merger a cash payment equal to the
number of shares of our common stock underlying such option
multiplied by the amount by which $70.00 exceeds the exercise
price of such option, less any applicable withholding taxes.
Anheuser-Busch Awards. At the effective time
of the Merger, each right of any kind, contingent or accrued, to
acquire or receive stock payable under Anheuser-Busch benefit
plans, vested or unvested, will be cancelled and converted into
the right to receive within 3 business days following the Merger
a cash payment equal to the number of shares of our common stock
subject to any such award immediately prior to the effective
time multiplied by either (i) $70.00 or (ii) if the
Anheuser-Busch award has a specified reference price, the amount
by which $70.00 exceeds such reference price, in each case less
any applicable withholding taxes.
Employee Stock Purchase
Plan. Anheuser-Buschs Global Employee Stock
Purchase Plan will terminate as of immediately prior to the
effective time of the Merger, and no new share offering date
will commence under the plan following the date of the Merger
Agreement, and unused amounts held in participant savings
accounts will be returned to participants.
The effect of the Merger upon our other employee benefit plans
is more fully described under Employee Benefits
beginning on page 72.
Payment
for the Shares of Common Stock
InBev will select a paying agent with our prior approval to make
payment of the merger consideration as described above.
Simultaneously with the effective time of the Merger, InBev will
deposit or cause to be deposited with such paying agent a cash
amount in immediately available funds to pay the aggregate
merger consideration payable to our stockholders as well as any
amounts described above that are payable to option holders and
Anheuser-Busch award recipients.
Following the effective time of the Merger, there will be no
further transfer of shares of our common stock.
Promptly after the effective time of the Merger and, in any
event, within five business days in the case of record holders
and three business days in the case of street
holders, the surviving corporation will cause the paying agent
to send you a letter of transmittal and instructions advising
you how to surrender your shares of common stock in exchange for
the merger consideration. The paying agent will pay you the
merger consideration to which you are entitled after you have
provided to the paying agent your signed letter of transmittal
and any other items specified by the letter of transmittal.
Interest will not be paid or accrue in respect of the merger
consideration. The surviving corporation will reduce the amount
of any merger consideration paid to you by any applicable
withholding taxes.
If any cash deposited with the paying agent is not claimed
within nine months following the effective time of the Merger,
such cash will be returned to the surviving corporation. Holders
who have not received the merger consideration due to
non-compliance with the exchange of certificates procedures must
seek payment from the surviving corporation.
59
Representations
and Warranties
In the Merger Agreement, Anheuser-Busch made representations and
warranties relating to, among other things:
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the corporate organization, good standing and qualification of
Anheuser-Busch and its subsidiaries;
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its capital structure;
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its corporate power and authority to enter into the Merger
Agreement;
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the fairness opinions delivered by Goldman Sachs and Citi;
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required regulatory filings, consents and approvals of
governmental entities;
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absence of conflicts with law, Anheuser-Buschs
organizational documents and contracts to which Anheuser-Busch
is a party;
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Anheuser-Buschs financial statements filed with the SEC
and related matters;
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compliance with NYSE listing and corporate governance rules, and
Sarbanes-Oxley;
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absence of changes since December 31, 2007;
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absence of litigation and unknown liabilities of Anheuser-Busch;
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employee benefits;
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Anheuser-Buschs compliance with laws;
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material contracts;
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Anheuser-Buschs owned and leased United States properties;
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lack of applicability of takeover statutes to the Merger;
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environmental matters;
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taxes;
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United States labor matters;
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intellectual property;
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brokers and finders; and
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Anheuser-Buschs solvency as of immediately prior to the
effective time of the Merger.
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In the Merger Agreement, InBev and Merger Sub each made
representations and warranties relating to:
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the corporate organization, good standing and qualification of
InBev and Merger Sub;
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corporate power and authority to enter into and consummate the
transactions contemplated by the Merger Agreement;
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required regulatory filings, consents and approvals of
governmental entities;
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the availability of the funds necessary to perform their
obligations under the Merger Agreement;
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the capitalization of Merger Sub;
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absence of litigation and judgments that are reasonably likely
to prevent or materially impair the consummation of the
transactions contemplated by the Merger Agreement;
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solvency of the surviving corporation immediately after the
effective time of the Merger;
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their ownership of our common stock; and
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brokers and finders.
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Many of Anheuser-Buschs representations and warranties are
qualified by a Material Adverse Effect standard. For purposes of
the Merger Agreement, Material Adverse Effect is
defined to mean:
A material adverse effect on the financial condition, business
or results of operations of Anheuser-Busch and its subsidiaries
taken as a whole, provided that none of the following, in and of
itself or themselves, shall constitute (or be taken into account
in determining the occurrence of) a Material Adverse Effect:
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effects resulting from changes in the economy or financial,
credit, banking, currency, commodities or capital markets
generally in the United States or other countries in which
Anheuser-Busch conducts material operations or any changes in
currency exchange rates, interest rates, monetary policy or
inflation, except any change, event, circumstance or development
that disproportionately adversely affects Anheuser-Busch and its
subsidiaries compared to other companies operating in the beer,
packaging or theme park industries (but only to the extent of
such disproportionate effect);
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effects resulting from changes that are the result of factors
generally affecting the beer, packaging or theme park
industries, except any change, event, circumstance or
development that disproportionately adversely affects
Anheuser-Busch and its subsidiaries compared to other companies
operating in the beer, packaging or theme park industries (but
only to the extent of such disproportionate effect);
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effects resulting from changes in law or in United States
generally accepted accounting principles (GAAP) or
rules and policies of the Public Company Accounting Oversight
Board, except any change, event, circumstance or development
that disproportionately adversely affects Anheuser-Busch and its
subsidiaries compared to other companies operating in the beer,
packaging or theme park industries (but only to the extent of
such disproportionate effect);
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any act of God or other calamity, national or international,
political or social conditions (including the engagement by any
country in hostilities, whether commenced before or after the
date of the Merger Agreement, and whether or not pursuant to the
declaration of a national emergency or war), or the occurrence
of any military or terrorist attack, except any change, event,
circumstance or development that disproportionately adversely
affects Anheuser-Busch and its subsidiaries compared to other
companies operating in the beer, packaging or theme park
industries (but only to the extent of such disproportionate
effect);
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effects resulting from any failure by Anheuser-Busch to meet any
estimates of revenues or earnings on or after the date of the
Merger Agreement, provided that this exception shall not prevent
or otherwise affect any change, effect, circumstance or
development underlying such failure from being taken into
account in determining whether a Material Adverse
Effect has occurred;
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the announcement or the existence of the Merger Agreement and
the transactions contemplated by the Merger Agreement (including
any related or resulting loss of or change in relationship with
any customer, supplier, distributor, wholesaler or other
business partner, or departure of any employee or officer, or
any litigation or other proceeding), including by reason of the
identity of InBev or any plans or intentions of InBev with
respect to the conduct of the business of Anheuser-Busch or its
subsidiaries;
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compliance with the terms of, any actions taken pursuant to, or
any failure to take action prohibited by, the Merger Agreement,
or such other changes or events to which InBev has expressly
consented in writing; or
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certain other agreed upon exceptions, including (A) any
impact of the Merger Agreement or the transactions contemplated
thereby on Anheuser-Buschs investment in Grupo Modelo
would not constitute a breach of the Merger Agreement or relieve
or excuse InBev or Merger Sub of their obligations under the
Merger Agreement, and (B) with respect to adverse
developments, if any, in Anheuser-Buschs labor relations.
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Litigation;
Consent Solicitation
The parties have agreed to voluntarily dismiss all pending
litigation between themselves relating to the removal or
removability of directors, the transactions contemplated by the
Merger Agreement and InBevs
61
consent solicitation. InBev has also agreed to terminate its
proposed consent solicitation to remove and replace
Anheuser-Buschs board of directors.
Conduct
of Business Prior to Closing
We have agreed in the Merger Agreement that, until the effective
time of the Merger, except as expressly contemplated by the
Merger Agreement or required by applicable law, we and our
subsidiaries will:
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operate our businesses in all material respects in the ordinary
and usual course of business;
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to the extent consistent with the above, use commercially
reasonable efforts to preserve our business organizations and
maintain existing relations and goodwill with governmental
entities, customers, suppliers, licensors, licensees,
distributors, creditors, lessors, employees and business
associates (except as announced by Anheuser-Busch prior to the
date of the Merger Agreement); and
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prior to making any written communications to the employees of
Anheuser-Busch or its subsidiaries pertaining to material
compensation or benefit matters contemplated by the Merger
Agreement, provide InBev with such a copy of such communication,
provide a reasonable period of time to review and comment on
such communications, and consider any comments that InBev may
have.
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We have also agreed that, until the consummation of the Merger,
except as expressly contemplated by the Merger Agreement or
required by applicable law or consented to in writing by InBev
(which consent will not be unreasonably withheld or delayed) or
set forth in the disclosure schedule that Anheuser-Busch
delivered to InBev in connection with the execution of the
Merger Agreement, we and our subsidiaries will not:
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adopt or propose any change in our organizational or governing
documents;
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merge or consolidate Anheuser-Busch or any of its subsidiaries
(except for transactions with wholly owned subsidiaries);
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restructure, reorganize, liquidate or otherwise enter into any
contracts imposing material changes or restrictions on our
assets, operations or businesses, other than in the ordinary
course;
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acquire stock or assets other than in the ordinary course of
business or, if outside the ordinary course of business, in an
amount not to exceed $50 million for any transaction or
related series of transactions;
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issue, sell, pledge, transfer or otherwise dispose of any shares
of capital stock of Anheuser-Busch and its subsidiaries or any
rights to acquire Anheuser-Busch securities (other than
issuances of common stock pursuant to outstanding awards under
Anheuser-Buschs equity award plans);
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create or incur any lien on intellectual property owned or
exclusively licensed by Anheuser-Busch or its subsidiaries or on
other material intellectual property or on assets having a value
in excess of $50 million;
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make any loans, advances, guarantees or capital contributions or
investments (other than to Anheuser-Busch or its wholly owned
subsidiaries) in excess of $10 million in the aggregate;
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declare or pay dividends (except for regular quarterly dividends
not to exceed $0.37 per share) or enter into any contract with
respect to the voting of Anheuser-Buschs capital stock;
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reclassify, split, combine, subdivide or redeem, purchase or
otherwise acquire, any Anheuser-Busch capital stock;
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incur, alter, amend or modify any indebtedness for borrowed
money or guarantee of a third partys indebtedness (other
than ordinary course borrowing consistent with past practice
that (i) does not exceed $200 million in the
aggregate, (ii) is in replacement of existing
Anheuser-Busch indebtedness, (iii) guarantees the
indebtedness of wholly owned subsidiaries otherwise in
compliance with Anheuser-Buschs operational covenants or
(iv) interest rate swaps consistent with past practice not
to exceed $500 million of notional debt in the aggregate);
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make or authorize capital expenditures in excess of
$875 million in the aggregate during any 12 month
period;
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enter into any contract that would be classified as a
material contract under the Merger Agreement, other
than in the ordinary course of business or in connection with an
acquisition permitted under the terms of the Merger Agreement;
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make material changes in accounting policies or procedures,
except as required by changes in GAAP;
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settle any action before a governmental authority or any
obligation or liability of Anheuser-Busch above a certain
threshold amount (excluding amounts covered by insurance) or
agree to any material limitation/restriction on any aspect of
Anheuser-Buschs or its subsidiaries business;
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amend or modify in any material respect or terminate any
material contract or intellectual property contract or cancel,
modify or waive any material debts or claims other than, in each
case, in the ordinary course of business;
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make any tax election, amend any tax return, settle any
controversy with respect to taxes or change any method of tax
accounting, where the amount of taxes in question is greater
than $50 million;
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transfer, sell or otherwise dispose of (i) any of
Anheuser-Buschs material intellectual property, other than
pursuant to non-material contracts granted in the ordinary
course of business or (ii) any of Anheuser-Buschs
material assets, product lines or businesses, except for
dispositions in the ordinary course of business and sale of
obsolete assets or other dispositions of less than
$50 million in the aggregate; and
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except pursuant to written, binding plans or as required by
applicable law:
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grant or provide any severance or termination payments or
benefits to any director, officer or employee (other than
certain severance and retention plans approved by InBev which
are described under The Merger Agreement
Employee Benefits beginning on page 72 of this proxy
statement);
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increase the compensation, bonus or benefits of, pay any bonus
to, or make any new equity awards to any director, officer or
employee (except to non-officer employees in the ordinary course
of business consistent with past practice);
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establish, adopt, amend or terminate any Anheuser-Busch benefit
plan (except as required by law) or amend the terms of any
outstanding equity-based awards;
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accelerate vesting or payment, or fund or secure payment, of
compensation or benefits under any Anheuser-Busch benefit plan
(if not already contemplated by such plan);
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materially change any actuarial or other assumptions used to
calculate funding obligations with respect to any Anheuser-Busch
benefit plan or change the manner in which contributions to such
plans are made or the basis on which such contributions are
determined, except as required by GAAP; and
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forgive any loans made to directors, officers or employees of
Anheuser-Busch or its subsidiaries.
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InBev and Merger Sub have agreed not to (i) take any action
that is reasonably likely to prevent or materially impair the
consummation of the Merger or (ii) enter into any
acquisition agreement, or make any acquisition, that is
reasonably likely to prevent, materially delay or impair the
consummation of the Merger. InBev has also agreed not to issue
any common stock or subscription rights with respect thereto
prior to obtaining approval of its shareholders of the Merger
unless the InBevs controlling shareholder, Stichting InBev
AK, agrees to vote any shares of InBev common stock that it
received in such issuance in favor of the Merger and the other
transactions contemplated by the Merger Agreement.
We have also agreed to provide to InBev, upon reasonable notice,
reasonable access during normal business hours to our employees,
books, contracts and records.
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Agreements
to Take Further Action and to Use Reasonable Best
Efforts
Subject to the terms and conditions set forth in the Merger
Agreement, each of Anheuser-Busch and InBev has agreed to use
their respective reasonable best efforts to take or cause to be
taken all actions, and do or cause to be done all things,
reasonably necessary, proper or advisable on their part under
the Merger Agreement and applicable law to consummate the Merger
and the other transactions contemplated by the Merger Agreement
as soon as practicable, including preparing and filing all
documentation to effect all necessary notices, reports and other
filings and to obtain all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained
from any third party
and/or
governmental entity to consummate the Merger or any of the other
transactions contemplated by the Merger Agreement.
Except as may be required to protect privilege or work product
protections, InBev and Anheuser-Busch have the right to review
in advance all of the information relating to the other party
and their subsidiaries (or in certain circumstances, such other
partys counsel) that appears in any filing made with, or
written materials submitted to, any third party
and/or any
governmental entity in connection with the Merger and the other
transactions contemplated by the Merger Agreement.
InBevs obligation to use reasonable best efforts to obtain
clearance from a governmental entity has been qualified so as to
not require InBev to proffer to, or agree to, divest, dispose of
or otherwise encumber or hold separate before or after the
effective time of the Merger any assets, licenses, operations,
rights, product lines or businesses of InBev or Anheuser-Busch
or any of their respective affiliates or to agree to any
material changes (including through licensing arrangements) or
restriction on, or other impairment of, InBevs ability to
own or operate any such assets, licenses, operations, rights,
product lines or businesses or InBevs ability to vote or
otherwise exercise full ownership rights with respect to the
stock of Anheuser-Busch to the extent such actions would,
individually or in the aggregate, result in reduction of assets,
categories of assets, businesses or investments that generated
in the aggregate more than 5% of the sum of the 2007 gross
sales and investment income of InBev and Anheuser-Busch,
including their respective subsidiaries, on a combined basis net
of any ongoing annual royalty payments or other ongoing revenue
contributions expected to be received as a result of
effectuating such divestitures or other arrangements.
Anheuser-Busch and InBev have agreed to promptly provide to
federal, state, local or foreign courts or governmental
antitrust entities with non-privileged information and documents
(i) requested by any governmental antitrust entity or
(ii) that are necessary for the consummation of the
transactions contemplated by the Merger Agreement.
Additionally, Anheuser-Busch has agreed to prepare and file this
proxy statement as promptly as practicable following the date
the parties entered into the Merger Agreement and InBev agreed
to promptly convene a meeting of its shareholders to approve,
among other things, the acquisition of Anheuser-Busch.
Anheuser-Busch and InBev have agreed to, upon request by the
other, furnish all information concerning itself, its
subsidiaries, directors, officers and stockholders and such
other matters as may be reasonably necessary or advisable in
connection with the proxy statement, the InBev prospectus, the
InBev shareholders meeting materials or any other
statement, filing, notice or application.
Financing
Debt
Financing
In accordance with the Merger Agreement, InBev has agreed to
satisfy on a timely basis all conditions applicable to InBev
under the senior debt and bridge facility agreements and must
obtain and consummate the financing contemplated by the senior
debt and bridge facility agreements and if such financing is
unavailable, obtain and consummate alternative financing.
InBev must give Anheuser-Busch prompt notice upon becoming aware
of any termination of the senior debt and bridge facility
agreements and of the occurrence of any event that would prevent
InBev from satisfying one or more of the conditions to initial
utilization in the senior debt and bridge facility agreements.
In the event that InBev becomes aware of any event or
circumstance that makes any portion of the financing
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of the senior debt and bridge facility agreements unavailable
prior to the Termination Date (as described below) on the terms
and conditions set forth in the senior debt and bridge facility
agreements, InBev must secure as promptly as practicable any
such unavailable portion from alternative sources.
Each of InBev and Merger Sub have expressly acknowledged that
the Merger is not conditioned on the availability of the funding
under the senior debt and bridge facility agreements or any
alternative financing arrangement.
Cooperation
of Anheuser-Busch
We have agreed to use our commercially reasonable efforts to
provide InBev and its representatives with reasonable access
during normal business hours to our books, records, personnel
and auditors. Additionally, in connection with InBevs debt
financing and equity or equity-linked capital raising
activities, we have agreed to:
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use commercially reasonable efforts to make our personnel
reasonably available for participation in meetings,
presentations, road shows, due diligence sessions (including
accounting due diligence sessions) and sessions with rating
agencies;
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use commercially reasonable efforts to provide InBev with all
information within our possession as is reasonably requested by
InBev for the preparation of materials for rating agency
presentations, offering documents, private placement memoranda,
bank information memoranda, prospectuses and similar documents
required in connection therewith (including preparation of
combined financial information on a pro forma basis);
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use commercially reasonable efforts to provide InBev with all
information within our possession as is reasonably requested by
InBev for preparation of additional definitive financing
documents, and consider in good faith InBevs reasonable
requests for certificates, legal opinions or documents as may be
reasonably required under the Facilities or in connection with
InBevs equity financing (it being understood that the
failure of Anheuser-Busch to provide any such certificate, legal
opinion or document will not constitute a breach of the Merger
Agreement by Anheuser-Busch);
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furnish InBev and its lenders or the underwriters of
InBevs equity financing with financial and other pertinent
information regarding our and our subsidiaries businesses
that is within our possession as may be reasonably requested by
InBev (including providing monthly financial statements
(excluding footnotes) and in the form that Anheuser-Busch
customarily prepares such financial statements within the time
such statements are customarily prepared);
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use commercially reasonable efforts to enable InBev to obtain
accountants comfort letters, as reasonably requested by
InBev (whether addressed to the underwriters of InBevs
equity financing
and/or
InBev) (it being understood that the failure of
Anheuser-Buschs accountants to agree to provide such
comfort letters or the failure to provide such comfort letters
will not constitute a breach of the Merger Agreement by
Anheuser-Busch, in each case so long as Anheuser-Busch has used
such commercially reasonable efforts); and
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use commercially reasonable efforts to permit the lenders under
the Facilities or the underwriters of InBevs equity
financing, as well as InBev, to evaluate the assets of
Anheuser-Busch and its Subsidiaries, and the cash management and
accounting systems, policies and procedures associated therewith.
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We are not required to take any of the actions described above
to the extent taking such action would, in our reasonable
judgment, interfere unreasonably with our or our
subsidiaries business or operations or would require our
board or the board of directors of any of our subsidiaries to
take any action.
Additionally, the Merger Agreement limits our obligation to
incur any fees or liabilities with respect to the debt or equity
financing prior to the effective time of the Merger. InBev has
also agreed to reimburse us for all reasonable out-of-pocket
costs and to indemnify and hold harmless Anheuser-Busch, our
subsidiaries, directors, officers, employees, representatives
and advisors from and against all losses, damages, claims, costs
65
or expenses suffered or incurred in connection with the debt
financing and any information utilized in connection therewith.
Post-Closing
Agreements of InBev
InBev has agreed that, effective upon the closing of the
transactions contemplated by the Merger Agreement:
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Anheuser-Buschs current headquarters in St. Louis,
Missouri will be the surviving corporations headquarters,
InBevs headquarters for North America (excluding Cuba) and
the global home of the flagship Budweiser brand;
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the current name of Anheuser-Busch will be the name of the
surviving corporation, and the name of InBev will be
Anheuser-Busch InBev N.V./S.A.; and
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InBev will, after consultation with the Anheuser-Busch board of
directors, nominate and cause to be elected following the
closing two current or former directors of Anheuser-Busch to the
board of directors of InBev, each such director to be confirmed
for a three-year term at the first annual general meeting of
InBev following the closing of the transactions contemplated by
the Merger Agreement.
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Following the closing of the transactions contemplated by the
Merger Agreement, InBev will:
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cause the surviving corporation to preserve
Anheuser-Buschs heritage and continue to support
philanthropic and charitable causes in St. Louis and other
communities in which Anheuser-Busch operates, including
Grants Farm and the Clydesdales operations;
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confirm the surviving corporations good faith commitment
that it will not close any of Anheuser-Buschs current 12
breweries located in the United States, provided there are no
new or increased federal or state excise taxes or other
unforeseen extraordinary events which negatively impact
Anheuser-Buschs business;
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reaffirm its commitment to the three-tier distribution system in
the United States and agree to work with Anheuser-Buschs
existing wholesaler panel to strengthen the relationship between
the surviving corporation and its wholesalers; and
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honor Anheuser-Buschs obligations under the Naming Rights
and Sponsorship Agreement, dated August 3, 2004, as
amended, between Busch Media Group, Inc., as authorized agent
for Anheuser-Busch, Incorporated and Cardinals Ballpark, LLC
relating to Busch Stadium.
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No
Solicitation of Other Offers
In connection with the Merger Agreement, we have agreed not to:
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initiate, solicit or knowingly encourage any inquiries or the
making of any proposal or offer that constitutes, or could
reasonably be expected to lead to, any acquisition proposal;
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engage in, continue or otherwise participate in any discussions
or negotiations regarding, or provide any non-public information
or data to any person relating to, any acquisition
proposal; or
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otherwise knowingly facilitate any effort or attempt to make an
acquisition proposal.
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Notwithstanding these restrictions, prior to the time that our
stockholders approve the Merger, if Anheuser-Busch has otherwise
complied in all material respects with its obligations under the
no solicitation covenant of the Merger Agreement, Anheuser-Busch
may provide information with respect to Anheuser-Busch and its
subsidiaries to any person who has made an unsolicited, written
acquisition proposal so long as:
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our board of directors believes in good faith that such
acquisition proposal is bona fide;
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such acquisition proposal provides for the acquisition of more
than 50% of our assets (on a consolidated basis) or total voting
power of our equity securities; and
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our board of directors concludes in good faith, after
consultation with its financial advisors and outside legal
counsel, that such acquisition proposal constitutes (in the
event our board of directors proposes to approve, recommend or
otherwise declare advisable such acquisition proposal) or is
reasonably likely to result in a superior proposal.
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We are also permitted to participate in discussions or
negotiations with any person making any acquisition proposal
that is consistent with the terms described above.
In the cases described above, we are not permitted to disclose
any non-public information to a person without entering into a
confidentiality agreement that contains provisions that are no
less favorable in the aggregate to us than those contained in
our confidentiality agreement with InBev. In addition, we will
promptly provide to InBev any non-public information concerning
us or our subsidiaries provided to such other person which was
not previously provided to InBev.
We have agreed to promptly (and, in any event, within
24 hours) notify InBev if any proposals or offers with
respect to an acquisition proposal are received by, any such
information is requested from, or any such discussions or
negotiation are sought to be initiated or continued with, us or
any of our representatives indicating the name of such person
and the material terms and conditions of any proposals or offers
(including, if applicable, copies of any written requests,
proposals or offers, including proposed agreements), and to keep
InBev informed, on a reasonably current basis, of the status and
terms of any such proposals or offers (including any amendments).
An acquisition proposal means any proposal or offer
with respect to a merger, joint venture, partnership,
consolidation, dissolution, liquidation, tender offer,
recapitalization, reorganization, share exchange, business
combination or similar transaction involving Anheuser-Busch or
any of its significant subsidiaries, and any acquisition by any
person, or proposal or offer, which if consummated would result
in any person becoming the beneficial owner of, directly or
indirectly, in one or a series of related transactions, 15% or
more of the total voting power or of any class of equity
securities of Anheuser-Busch or those of any of its significant
subsidiaries, or 15% or more of the consolidated total assets
(including equity securities of its subsidiaries) of
Anheuser-Busch, in each case other than the transactions
contemplated by the Merger Agreement.
A superior proposal means a bona fide acquisition
proposal in connection with which there has been no material
violation of the no solicitation covenant contained in the
Merger Agreement that would result in any person (or its
stockholders) becoming the beneficial owner, directly or
indirectly, of more than 50% of the assets (on a consolidated
basis) or more than 50% of the total voting power of the equity
securities of Anheuser-Busch that our board of directors has
determined in its good faith judgment is reasonably likely to be
consummated in accordance with its terms, taking into account
all legal, financial and regulatory aspects of the proposal and
the person making the proposal, and if consummated, would result
in a transaction more favorable to Anheuser-Buschs
stockholders from a financial point of view than the
transactions contemplated by the Merger Agreement (after taking
into account any revisions to the terms of the Merger proposed
by InBev).
In addition to the rights described above, we may terminate the
Merger Agreement and enter into a definitive agreement with
respect to a superior proposal under certain circumstances. See
Recommendation Withdrawal/Termination in Connection with a
Superior Proposal.
Recommendation
Withdrawal/Termination in Connection with a Superior
Proposal
Our board of directors has unanimously resolved to recommend
that our stockholders adopt the Merger Agreement. However, if
our board of directors determines in good faith, after
consultation with outside counsel, that the failure to take such
action would be inconsistent with the boards fiduciary
duties to our stockholders under applicable law, it may, at any
time prior to, but not after, the adoption of the Merger
Agreement by our stockholders:
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withhold, withdraw, qualify or modify, or publicly propose to
withhold, withdraw, qualify or modify, in a manner adverse to
InBev, its recommendation that our stockholders adopt the Merger
Agreement;
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enter into any letter of intent, memorandum of understanding,
agreement in principle, acquisition agreement, merger agreement
or other agreement relating to any acquisition proposal.
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However, in order to enter into an agreement relating to an
acquisition proposal, our board must also have determined in
good faith, after consultation with our financial advisors, that
such acquisition proposal is a superior proposal and remains so
after our board follows the procedures described below.
To the extent the board proposes to take the foregoing actions
with regard to its recommendation, it may only do so if:
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we have not materially breached our obligations under the no
solicitation provision of the Merger Agreement;
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we have given InBev at least 72 hours notice of our
intention to change our recommendation or terminate the Merger
Agreement; and
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prior to terminating the Merger Agreement, our board of
directors has taken into account any changes to the terms of the
Merger Agreement proposed by InBev and other information
provided by InBev during such
72-hour
period.
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Any material amendment to an acquisition proposal will be deemed
a new acquisition proposal that will entitle InBev to an
additional 72 hour period to propose changes to the Merger
Agreement and provide additional information.
In addition, we are not entitled to enter into any agreement
with respect to a superior proposal unless we have concurrently
paid to InBev the applicable termination fee as described in
further detail in Termination Fees
beginning on page 70.
Conditions
to the Merger
Conditions to Each Partys
Obligations. Each partys obligation to
complete the Merger is subject to the satisfaction or waiver at
or prior to the effective time of the Merger of each of the
following conditions:
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the Merger Agreement must have been adopted by the affirmative
vote of the holders of a majority of the outstanding shares of
our common stock, and a resolution approving the Merger (and the
change of InBevs name) must have been passed by the
holders of 75% of the ordinary shares of InBev common stock
present in person or by proxy at an extraordinary
shareholders meeting of InBev;
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any applicable waiting period under the HSR Act must have
expired or been earlier terminated and all other required
approvals and authorizations from other applicable antitrust
authorities must have been obtained; and
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no court or other governmental entity shall have enacted,
issued, promulgated, enforced or entered any law (temporary,
preliminary or permanent) that is in effect and restrains,
enjoins or otherwise prohibits consummation of the Merger.
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Conditions to InBevs and Merger Subs
Obligations. The obligation of InBev and Merger
Sub to complete the Merger is subject to the satisfaction or
waiver at or prior to the effective time of the Merger of each
of the following additional conditions:
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as of the date of the Merger Agreement and as of the Closing
Date, (i) our representations and warranties that are
qualified by Material Adverse Effect must be true and correct
(unless such representation or warranty expressly speaks as of
an earlier date, in which case such representation or warranty
shall be true and correct as of such earlier date) and
(ii) our representations and warranties that are not so
qualified must be true and correct provided that the condition
set forth in (ii) will be deemed to have been satisfied
even if any representations and warranties are not true and
correct unless such failure, individually or in the aggregate,
would, or would be reasonably likely to, result in a material
adverse effect (except for representations and warranties with
respect to our capital structure, corporate power and authority
to enter into the Merger Agreement, the fairness opinions
delivered by
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Goldman Sachs and Citi and the applicability of anti-takeover
statues, which must be true in all material respects);
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we must have performed in all material respects all obligations
required to be performed under the Merger Agreement at or prior
to the closing date;
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since the date of the Merger Agreement, there must not have been
any change, event, circumstance or development that has had, or
would be reasonably likely to have, a Material Adverse
Effect; and
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we must deliver to InBev at closing a certificate with respect
to the satisfaction of the foregoing conditions relating to
representations, warranties and obligations.
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Conditions to Anheuser-Buschs
Obligations. Our obligation to complete the
Merger is subject to the satisfaction or waiver at or prior to
the effective time of the Merger of each of the following
additional conditions:
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as of the date of the Merger Agreement and as of the Closing
Date (unless such representation or warranty expressly speaks as
of an earlier date, in which case such representation or
warranty shall be true and correct as of such earlier date),
InBevs representations and warranties must be true and
correct in all material respects;
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InBev and Merger Sub must have performed in all material
respects all obligations required to be performed by them under
the Merger Agreement at or prior to the closing date; and
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InBev must deliver to us at closing a certificate with respect
to the satisfaction of the foregoing conditions relating to
representations, warranties and obligations.
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Termination
of the Merger Agreement
The Merger Agreement may be terminated at any time prior to the
consummation of the Merger, whether before or after stockholder
approval has been obtained:
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by mutual written consent of Anheuser-Busch and InBev;
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by either Anheuser-Busch or InBev if:
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the Merger is not completed on or before March 19, 2009
(the Termination Date), so long as the failure of
the Merger to be completed by such date is not the result of, or
caused by, the failure of the terminating party to comply in all
material respects with the covenants and agreements set forth in
the Merger Agreement;
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our stockholders do not adopt the Merger Agreement at the
special meeting or any adjournment or postponement thereof;
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a resolution by InBevs shareholders approving the Merger
has not been obtained at the extraordinary shareholders
meeting of InBev (however, InBev may not terminate the Merger
Agreement if Stichting InBev AK is in breach of its voting
agreement with Anheuser-Busch); or
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any order, decree or ruling permanently restraining, enjoining
or otherwise prohibiting consummation of the Merger shall become
final and non-appealable;
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provided, that the party seeking to terminate the Merger
Agreement has not breached in any material respect its
obligations under the Merger Agreement in any manner that shall
have resulted in the failure of a condition to the consummation
of the Merger;
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prior to obtaining stockholder approval, we terminate the Merger
Agreement in order to enter into an agreement with respect to a
superior proposal and, concurrently with such termination, pay
InBev the required termination fee;
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69
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InBev or Merger Sub has breached any of its representations,
warranties, covenants or agreements under the Merger Agreement,
or any such representation or warranty made by them shall have
become untrue, such that certain conditions to closing would not
be satisfied and such breach or condition is not curable, or if
curable, is not cured, within the earlier of 30 days after
written notice of such breach or the Termination Date; or
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all of the conditions to the obligations of InBev and Merger Sub
have been satisfied and InBev has failed to consummate the
Merger no later than 30 calendar days after the
satisfaction of such conditions;
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our board of directors adversely changes or withdraws its
recommendation that our stockholders adopt the Merger Agreement;
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following the receipt of an acquisition proposal, we fail to
reaffirm the recommendation of our board of directors that our
stockholders adopt the Merger Agreement within 10 business days
of InBevs reasonable written request that we do so;
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following the public disclosure (other than by InBev or its
affiliates) of a tender offer or exchange offer for outstanding
shares of Anheuser-Buschs common stock, we fail to
recommend unequivocally against such tender or exchange offer
within the earlier of one day prior to the special meeting or
11 business days after the commencement of such
offer; or
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we have breached any of our representations, warranties,
covenants or agreements under the Merger Agreement, or any such
representation or warranty made by us shall have become untrue,
such that certain conditions to closing would not be satisfied
and such breach or condition is not curable, or if curable, is
not cured, within the earlier of 30 days after written
notice of such breach or the Termination Date.
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Termination
Fees
If the Merger Agreement is terminated by us or by InBev or
Merger Sub under the conditions described in further detail
below, a termination fee in the amount of $1,250,000,000 (the
termination fee) may be payable to Anheuser-Busch or
InBev, as applicable.
We must pay the termination fee at the direction of InBev if:
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we terminate the Merger Agreement prior to the special meeting
in order to enter into a definitive agreement for a superior
proposal;
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InBev terminates the Merger Agreement because:
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our board of directors adversely changes or withdraws its
recommendation that our stockholders adopt the Merger Agreement;
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following receipt of an acquisition proposal, our board of
directors fails to reaffirm our approval or recommendation of
the Merger within 10 business days of InBevs
reasonable written request that we do so;
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following the public disclosure (other than by InBev or its
affiliates) of a tender offer or exchange offer for outstanding
shares of Anheuser-Buschs common stock, we fail to
recommend unequivocally against such tender or exchange offer
within the earlier of one day prior to the special meeting or 11
business days after the commencement of such offer; or
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we have breached any of our representations, warranties,
covenants or agreements under the Merger Agreement, or any such
representation or warranty made by us shall have become untrue,
such that certain conditions to closing would not be satisfied
and such breach or condition is not curable, or if curable, is
not cured, within the earlier of 30 days after written
notice of such breach or the
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70
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Termination Date (or if we have terminated the Merger Agreement
following the failure of our stockholders to adopt the Merger
Agreement and any of the above events have occurred);
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we or InBev terminate the Merger Agreement because our
stockholders fail to adopt the Merger Agreement or because the
Merger is not consummated by the Termination Date (unless the
Merger has not been consummated by the Termination Date because
of a breach by InBev of its obligations under the Merger
Agreement) and, in each case,
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a bona fide acquisition proposal has been made to Anheuser-Busch
or any of its subsidiaries or to its stockholders generally, or
any person has publicly announced an intention (whether or not
conditional) to make a bona fide acquisition proposal, and such
acquisition proposal or publicly announced intention has not
been publicly withdrawn without qualification at least
(A) 30 business days prior to the date of termination (in
the case of termination of failure to consummate the Merger by
the Termination Date), and (B) at least 10 business
days prior to the date of the special meeting (in the case of
termination for failure to obtain stockholder approval); and
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within twelve months after such termination we enter into an
agreement with respect to, or consummate, any acquisition
proposal.
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If Anheuser-Busch pays a termination fee to InBev, such
termination fee shall be InBevs and Merger Subs sole
and exclusive remedy for monetary damages under the Merger
Agreement.
InBev agreed in the Merger Agreement to pay the termination fee
to Anheuser-Busch if we or InBev terminate the Merger Agreement
for failure to obtain a resolution of InBevs shareholders
approving the Merger. Under certain specified circumstances,
such termination fee would be Anheuser-Buschs sole and
exclusive remedy in the event of a termination of the Merger
Agreement resulting from such failure. InBevs shareholders
approved the Merger at an extraordinary general meeting of
shareholders on September 29, 2008.
Specific
Performance
Each of the parties is specifically authorized to obtain an
order of specific performance to enforce performance of any
covenant or obligation under the Merger Agreement or injunctive
relief to restrain any breach or threatened breach, including,
in the case of Anheuser-Busch, to specifically enforce
InBevs obligations to seek to cause its financing to be
funded and InBevs obligations to consummate the Merger.
Indemnification
and Insurance
Prior to the effective time of the Merger, Anheuser-Busch will,
and if Anheuser-Busch is unable to, InBev will cause the
surviving corporation to, obtain and fully pay for
tail insurance policies with a claims period of at
least six years from and after the effective time of the Merger
from an insurance carrier with the same or better credit rating
as Anheuser-Buschs current insurance carrier with respect
to directors and officers liability insurance and
fiduciary liability insurance (collectively, D&O
Insurance), for the persons who, as of the date of the
Merger Agreement, were covered by Anheuser-Buschs existing
D&O Insurance, with terms, conditions, retentions and
levels of coverage at least as favorable as
Anheuser-Buschs existing D&O Insurance with respect
to matters existing or occurring at or prior to the effective
time of the Merger (including in connection with the Merger
Agreement or the transactions or actions contemplated thereby).
If Anheuser-Busch and the surviving corporation for any reason
fail to obtain such tail insurance policies, InBev
has agreed to cause the surviving corporation to continue to
maintain in effect Anheuser-Buschs current D&O
Insurance, at no expense to the beneficiaries, for a period of
at least six years from and after the effective time
71
of the Merger. If such insurance is unavailable, InBev has
agreed to cause the surviving corporation to purchase the best
available D&O Insurance for such six-year period from an
insurance carrier with the same or better credit rating as
Anheuser-Buschs current insurance carrier with respect to
Anheuser-Buschs existing D&O Insurance with terms,
conditions, retentions and with levels of coverage at least as
favorable as provided in Anheuser-Buschs existing policies
as of the date of the Merger Agreement. In no event will InBev
or the surviving corporation be required to expend an annual
premium amount in excess of 300% of the annual premiums
currently paid by Anheuser-Busch for such insurance; if the
annual premiums of such insurance coverage exceed that amount,
the surviving corporation is required to obtain a policy with
the greatest coverage available for a cost not exceeding such
amount.
Following the effective time of the Merger, InBev and the
surviving corporation will indemnify, defend and hold harmless
each present and former director and officer of Anheuser-Busch
or any of its subsidiaries and any fiduciary under any
Anheuser-Busch benefit plan (the indemnified
parties), and will also promptly advance expenses as
incurred, against any costs or expenses (including
attorneys fees and disbursements), judgments, fines,
losses, claims, damages or liabilities incurred in connection
with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative,
arising out of or pertaining to the fact that the indemnified
party is or was an officer, director, employee or fiduciary of
Anheuser-Busch or any of its subsidiaries or a fiduciary under
any Anheuser-Busch benefit plan, whether asserted or claimed
prior to, at or after the effective time of the Merger
(including with respect to any acts or omissions in connection
with the Merger Agreement and the transactions and actions
contemplated thereby), to the fullest extent permitted under
Delaware law and our certificate of incorporation or bylaws and
any indemnification agreement in effect on the date of the
Merger Agreement. Any determination required to be made with
respect to whether an officers or directors conduct
complied with the standards set forth under Delaware law and our
certificate of incorporation and bylaws will be made by
independent counsel selected by the indemnified party. In the
event of any claim, action, suit, proceeding or investigation,
(x) neither InBev nor the surviving corporation may settle,
compromise or consent to the entry of any judgment in any claim,
action, suit, proceeding or investigation, unless such
settlement, compromise or consent includes an unconditional
release of the indemnified party from all liability arising out
of such claim, action, suit, proceeding or investigation or the
indemnified party otherwise consents, and (y) the surviving
corporation will cooperate in the defense of such matter.
Additionally, the charter and bylaws of the surviving
corporation must contain provisions no less favorable with
respect to indemnification of and advancement of expenses to
individuals who were directors and officers prior to the
effective time of the Merger than those contained in our
certificate of incorporation and bylaws as of the date of the
Merger Agreement, and such provisions may not be amended,
repealed or otherwise modified for a period of six years from
the effective time of the Merger in any manner that would
adversely affect the rights of any indemnified party.
The rights of the indemnified parties under the Merger Agreement
are in addition to any rights such indemnified parties may have
under the certificate of incorporation or bylaws of
Anheuser-Busch or any of its subsidiaries, or under any
applicable contracts or laws. InBev has agreed to honor and
perform under all indemnification agreements entered into by
Anheuser-Busch or any of its subsidiaries.
Employee
Benefits
From and after the effective time of the Merger, InBev will, and
will cause the surviving corporation to, honor, in accordance
with their terms, all benefit plans. In addition, InBev or the
surviving corporation will, as applicable, pay the annual
bonuses for the 2008 calendar year to employees of
Anheuser-Busch and its subsidiaries who remain employed through
December 31, 2008 or who are involuntarily terminated
without cause, between the effective time of the Merger and
December 31, 2008 (other than employees who are given a
notice of termination prior to the effective time of the
Merger), based on the performance for the 2008 year in
accordance with Anheuser-Buschs practices and policies in
effect on the date of the Merger Agreement.
Until the first anniversary of the effective time of the Merger
or December 31, 2009, whichever is later, InBev shall, or
shall cause the surviving corporation and each of its
subsidiaries to, provide employees of Anheuser-Busch and its
subsidiaries at the effective time of the Merger with
compensation and benefits that
72
are not less favorable in the aggregate than the compensation
and benefits provided to current employees immediately prior to
the effective time of the Merger.
InBev will cause the surviving corporation to cause service
rendered by employees of Anheuser-Busch and its subsidiaries
prior to the consummation of the Merger to be taken into account
for vesting and eligibility purposes (but not for accrual
purposes) under employee benefit plans of the surviving
corporation and its subsidiaries, to the same extent as such
service was taken into account under the corresponding benefit
plans of Anheuser-Busch and its subsidiaries for those purposes.
Current employees will not be subject to any pre-existing
condition limitation under any health plan of the surviving
corporation or its subsidiaries for any condition for which they
would have been entitled to coverage under the corresponding
benefit plan of Anheuser-Busch and its subsidiaries in which
they participated prior to the effective time of the Merger.
InBev will cause the surviving corporation and its subsidiaries
to give such current employees credit under such plans for
co-payments made and deductibles satisfied prior to the
effective time of the Merger.
Until the first anniversary of the effective time of the Merger
or December 31, 2009, whichever is later, InBev or the
surviving corporation, or InBevs or the surviving
corporations subsidiaries, as applicable, will pay
severance benefits to non-union employees of Anheuser-Busch and
its Subsidiaries who are involuntarily terminated without cause
during such period (other than those employees who are given a
notice of termination prior to the effective time of the Merger)
that are not less favorable than the severance benefits payable
under Anheuser-Buschs Severance Pay Program as in effect
immediately prior to the effective time of the Merger.
Amendment,
Extension and Waiver
To the extent permitted by applicable law, the parties may amend
the Merger Agreement at any time, provided that, pursuant to
Delaware law, after our stockholders have adopted the Merger
Agreement, there shall be no amendment that decreases the merger
consideration or which adversely affects the rights of our
stockholders without the approval of our stockholders. The
Merger Agreement may not be amended, changed, supplemented or
otherwise modified except by a written agreement executed by all
of the parties to the Merger Agreement.
At any time before the consummation of the Merger, each of the
parties to the Merger Agreement may waive compliance with any of
the agreements or conditions contained in the Merger Agreement
to the extent permitted by applicable law.
Fees and
Expenses
Whether or not the Merger is consummated, all costs and expenses
incurred in connection with the Merger Agreement and the Merger
and the other transactions contemplated by the Merger Agreement
will be paid by the party incurring such expense, except that
(i) InBev will reimburse Anheuser-Busch for charges and
expenses incurred by Anheuser-Busch in connection with its
cooperation with InBev in InBevs efforts to obtain
financing, and (ii) the party paying a termination fee
under the terms of the Merger Agreement will reimburse the other
party for charges and expenses incurred in connection with any
suit brought to enforce payment of the termination fee.
VOTING
AGREEMENT OF STICHTING INBEV AK
In connection with the Merger Agreement, the controlling
stockholder of InBev (holding voting power of, or having the
right to direct the voting by certain affiliated parties or
parties acting in concert of, in the aggregate, voting power of
approximately 63.47% of InBevs outstanding common stock)
has entered into a voting agreement with Anheuser-Busch pursuant
to which such stockholder has agreed, among other things, to
vote at an extraordinary shareholders meeting of InBev in
favor of, among other things, InBevs acquisition of
Anheuser-Busch. The voting agreement will terminate upon the
earlier of the effective time of the Merger and the termination
of the Merger Agreement. InBev shareholders approved the
acquisition of Anheuser-Busch by InBev at InBevs
extraordinary shareholders meeting on September 29,
2008.
73
ADJOURNMENT
OF THE SPECIAL MEETING
The
Adjournment Proposal
If the number of shares of common stock present in person or
represented by proxy at the special meeting voting in favor of
the proposal to adopt the Merger Agreement is insufficient to
adopt the Merger Agreement at the time of the special meeting,
then we intend to move to adjourn the special meeting in order
to enable our board of directors to solicit additional proxies
in respect of such proposal. In that event, we will ask our
stockholders to vote only upon the adjournment proposal, and not
the proposal to adopt the Merger Agreement.
In this proposal, we are asking you to authorize the holder of
any proxy solicited by our board of directors to vote in favor
of granting discretionary authority to the proxy or
attorney-in-fact to adjourn the special meeting for the purpose
of soliciting additional proxies. If our stockholders approve
the adjournment proposal, we could adjourn the special meeting
and any adjourned session of the special meeting and use the
additional time to solicit additional proxies, including the
solicitation of proxies from stockholders that have previously
returned properly executed proxies or authorized a proxy by
using the Internet or a toll-free telephone number. Among other
things, approval of the adjournment proposal could mean that,
even if we had received proxies representing a sufficient number
of votes against the adoption of the Merger such that the
proposal to adopt the Merger Agreement would be defeated, we
could adjourn the special meeting without a vote on the adoption
of the Merger Agreement and seek to obtain sufficient votes in
favor of adoption of the Merger Agreement. Additionally, we may
seek to adjourn the special meeting if a quorum is not present
at the special meeting.
Vote
Required and Board Recommendation
Approval of the proposal to adjourn the special meeting requires
an affirmative vote of a majority of the votes cast that are
entitled to vote at the special meeting, assuming a quorum is
present. No proxy that is specifically marked
AGAINST adoption of the Merger will be voted in
favor of the adjournment proposal, unless it is specifically
marked FOR the proposal to adjourn the special
meeting.
Our board of directors believes that if the number of shares of
common stock present in person or represented by proxy at the
special meeting voting in favor of the proposal to adopt the
Merger is not a sufficient number of shares to approve the
proposal to adopt the Merger Agreement, it is in the best
interests of Anheuser-Busch and its stockholders to enable our
board of directors to continue to seek to obtain a sufficient
number of additional votes in favor of approval of the proposal
to adopt the Merger Agreement.
Our board of directors unanimously recommends that you vote
FOR the proposal to adjourn the special meeting to a
later date, if necessary or appropriate, to solicit additional
proxies in favor of the proposal to adopt the Merger Agreement
if there are insufficient votes at the time of the special
meeting to adopt the Merger Agreement.
74
MARKET
PRICE OF COMMON STOCK
Our common stock is listed for trading on the NYSE under the
symbol BUD. The following table sets forth, for the
fiscal quarters indicated, the high and low sales prices per
share as reported on the NYSE composite tape. In addition, the
table also sets forth the quarterly cash dividends per share
declared and paid by Anheuser-Busch with respect to its common
stock.
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Common Stock
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Quarterly
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High
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Low
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Dividend
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Year Ended December 31, 2006
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First Quarter
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$
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44.17
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$
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40.17
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$
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0.270
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Second Quarter
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$
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47.07
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$
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41.89
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$
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0.270
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Third Quarter
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$
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50.00
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$
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44.75
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$
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0.295
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Fourth Quarter
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$
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49.75
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$
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46.05
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$
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0.295
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Year Ended December 31, 2007
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First Quarter
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$
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51.74
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$
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47.95
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$
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0.295
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Second Quarter
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$
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55.19
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$
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49.18
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$
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0.295
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Third Quarter
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$
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52.50
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$
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47.38
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$
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0.330
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Fourth Quarter
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$
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53.91
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$
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48.16
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|
$
|
0.330
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Year Ended December 31, 2008
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First Quarter
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$
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54.67
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|
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$
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45.55
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$
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0.330
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Second Quarter
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$
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62.99
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$
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46.72
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$
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0.330
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Third Quarter
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$
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68.58
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$
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61.03
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$
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0.370
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Fourth Quarter (through October 3, 2008)
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$
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66.04
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$
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63.93
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The closing sale price of our common stock on the New York Stock
Exchange (the NYSE) on May 22, 2008, the last
trading day before the initial market rumors surrounding a
potential proposal by InBev to purchase Anheuser-Busch, was
$52.58. The closing sale price of our common stock on the NYSE
on June 10, 2008, the last trading day before the
announcement by InBev of its proposal to purchase
Anheuser-Busch, was $57.15. The closing sale price of our common
stock on the NYSE on July 11, 2008, the last trading day
prior to the announcement of the Merger, was $66.50. On
October 3, 2008, the most recent practicable date before
this proxy statement was printed, the closing price for our
common stock on the NYSE was $65.10 per share. You are
encouraged to obtain current market quotations for our common
stock in connection with voting your shares.
75
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning beneficial
ownership of our common stock as of August 31, 2008 for:
(a) each of Anheuser-Buschs directors, (b) each
of Anheuser-Buschs current and former executive officers
for whom disclosure is required; (c) Anheuser-Buschs
directors and executive officers as a group; and (d) each
beneficial holder of more than five percent of our common stock.
Except as otherwise noted in the footnotes below, each person or
entity identified below has sole voting and investment power to
such securities, and, unless otherwise indicated, the address of
each person named in the table below is c/o Anheuser-Busch
Companies, Inc., One Busch Place, St. Louis, Missouri 63118.
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Number of Shares
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of Common Stock
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Percentage of
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Name
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Beneficially Owned
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class
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Barclays Global Investors, NA and Affiliates
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41,597,470
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(1)
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5.76
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%
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W. Randolph Baker
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2,194,574
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(2)
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*
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Mark T. Bobak
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864,392
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(3)
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|
|
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*
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August A. Busch III
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|
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9,178,439
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(4)
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1.26
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%
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August A. Busch IV
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|
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2,730,862
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(5)
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|
|
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*
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James J. Forese
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|
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33,313
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(6)
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|
|
|
*
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James R. Jones
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|
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42,797
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(7)(8)
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|
|
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*
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Vernon R. Loucks, Jr.
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|
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42,883
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(7)
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|
|
|
*
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Vilma S. Martinez
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|
|
41,899
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(9)
|
|
|
|
*
|
Douglas J. Muhleman
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|
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1,345,278
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(10)
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|
|
|
*
|
Michael J. Owens
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|
|
955,112
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(11)
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|
|
|
*
|
William Porter Payne
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|
|
44,449
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(7)
|
|
|
|
*
|
Joyce M. Roché
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|
|
40,125
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(7)
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|
|
|
*
|
Henry Hugh Shelton
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|
|
39,573
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(12)
|
|
|
|
*
|
Patrick T. Stokes
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|
|
6,811,751
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(13)
|
|
|
|
*
|
Andrew C. Taylor
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|
|
59,617
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(9)
|
|
|
|
*
|
Douglas A. Warner III
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|
|
53,001
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(7)
|
|
|
|
*
|
Edward E. Whitacre, Jr.
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|
|
29,883
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(14)
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|
|
|
*
|
All directors and executive officers as a group (30 persons)
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|
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31,552,284
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(15)
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|
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4.22
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%
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|
|
* |
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less than 1% of the common stock outstanding |
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(1) |
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This information is based on the Schedule 13G dated
January 10, 2008 filed by Barclays Global Investors, NA and
affiliates, 45 Fremont Street, San Francisco, CA 94105 with
the Securities and Exchange Commission reporting on beneficial
ownership as of December 31, 2007. In addition to Barclays
Global Investors, NA, affiliates on the filing are Barclays
Global Fund Advisors, Barclays Global Investors, LTD,
Barclays Global Investors Japan Trust and Banking Company
Limited, Barclays Global Investors Japan Limited, Barclays
Global Investors Canada Limited, Barclays Global Investors
Australia Limited, and Barclays Global Investors (Deutschland)
AG. According to the filing, the reporting persons have sole
voting power with respect to 36,285,922 shares and sole
investment power with respect to 41,597,470 shares. |
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(2) |
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The number of shares includes 1,877,309 shares that are
subject to currently exercisable stock options, of which 245,737
are held in a family partnership, and 20,306 shares of
unvested restricted stock. |
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(3) |
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Mr. Bobak retired from Anheuser-Busch on December 31,
2007. The number of shares includes 843,785 shares that are
subject to currently exercisable stock options and
18,585 shares of unvested restricted stock. |
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(4) |
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The number of shares includes 4,630,129 shares that are
subject to currently exercisable stock options, of which 50,000
are held in trusts for the benefit of Mr. Busch IV and
50,000 are held in trust for another |
76
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child of Mr. Busch III, and 9,275 shares of unvested
restricted stock. Of the shares shown, Mr. Busch III
has shared voting and shared investment power as to
1,059,836 shares and 2,048,064 shares are held in
trusts of which Mr. Busch III is income beneficiary
and as to which he has certain rights, but as to which he has no
voting or investment power. 85,348 shares beneficially
owned by members of his immediate family are not included. |
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(5) |
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The number of shares includes 2,607,779 shares that are
subject to currently exercisable stock options. Of those
options, 50,000 were granted to Mr. Busch III and
presently are held in trust for the benefit of Mr. Busch
IV. Also included in the total are 67,847 shares of
unvested restricted stock. |
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(6) |
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The number of shares includes 20,001 shares that are
subject to currently exercisable stock options and
2,913 shares of unvested restricted stock. |
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(7) |
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The number of shares includes 38,001 shares that are
subject to currently exercisable stock options and
499 shares of unvested restricted stock. 3,383 of the
shares held by Mr. Loucks have been pledged as security. |
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(8) |
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Mr. Jones has shared voting and shared investment power
with respect to 2,256 of these shares. |
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(9) |
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The number of shares includes 38,001 shares that are
subject to currently exercisable stock options and
2,913 shares of unvested restricted stock. |
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(10) |
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The number of shares includes 1,300,701 shares that are
subject to currently exercisable stock options and
16,815 shares of unvested restricted stock. |
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(11) |
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The number of shares includes 892,624 shares that are
subject to currently exercisable stock options and
14,628 shares of unvested restricted stock. |
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(12) |
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The number of shares includes 30,001 shares that are
subject to currently exercisable stock options and
499 shares of unvested restricted stock. |
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(13) |
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The number of shares includes 6,405,126 shares that are
subject to currently exercisable stock options (of which
1,200,833 are held in a family partnership), 351,252 shares
that are held in a family partnership for which
Mr. Stokes wife has shared voting and shared
investment power, and 15,645 shares that are held in a
trust in which Mr. Stokes and his wife have an economic
interest, but as to which they have no voting or investment
power. Also included are 13,446 shares of unvested
restricted stock. |
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(14) |
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The number of shares includes 25,001 shares that are
subject to currently exercisable stock options and
499 shares of unvested restricted stock. |
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(15) |
|
The number of shares stated includes 25,433,207 shares that
are subject to currently exercisable stock options,
261,688 shares of unvested restricted stock, 2,048,064 of
the shares that are referred to in Note 4, as to which
Mr. Busch III has no voting or investment power, and
366,897 of the shares that are referred to in Note 13 for
which Mr. Stokes has no voting or investment power. 3,383
of the shares are pledged as security. 50,000 shares
subject to currently exerciseable stock options granted to
Mr. Busch III and held in trust for
Mr. Busch IV are only counted once in the total. The
directors and executive officers as a group have sole voting and
sole investment power as to 2,641,994 shares and shared
voting and shared investment power as to 1,062,121 shares.
98,259 shares held by immediate family members or family
trusts are not included and beneficial ownership of such shares
is disclaimed. |
77
DISSENTERS
RIGHTS OF APPRAISAL
Under the General Corporation Law of the State of Delaware (the
DGCL), you have the right to dissent from the Merger
and to receive payment in cash for the fair value of your common
stock as determined by the Delaware Court of Chancery, together
with a fair rate of interest, if any, as determined by the
court, in lieu of the consideration you would otherwise be
entitled to receive pursuant to the Merger Agreement. These
rights are known as appraisal rights. Anheuser-Buschs
stockholders electing to exercise appraisal rights must comply
with the provisions of Section 262 of the DGCL in order to
perfect their rights. Anheuser-Busch will require strict
compliance with the statutory procedures.
The following is intended as a brief summary of the material
provisions of the Delaware statutory procedures required to be
followed by a stockholder in order to dissent from the Merger
and perfect appraisal rights.
This summary, however, is not a complete statement of all
applicable requirements and is qualified in its entirety by
reference to Section 262 of the DGCL, the full text of
which appears in Annex D to this proxy statement. Failure
to precisely follow any of the statutory procedures set forth in
Section 262 of the DGCL may result in a termination or
waiver of your appraisal rights.
Section 262 requires that stockholders be notified that
appraisal rights will be available not less than 20 days
before the stockholders meeting to vote on the Merger. A
copy of Section 262 must be included with such notice. This
proxy statement constitutes Anheuser-Buschs notice to its
stockholders of the availability of appraisal rights in
connection with the Merger in compliance with the requirements
of Section 262. If you wish to consider exercising your
appraisal rights, you should carefully review the text of
Section 262 contained in Annex D since failure to
timely and properly comply with the requirements of
Section 262 will result in the loss of your appraisal
rights under the DGCL.
If you elect to demand appraisal of your shares, you must
satisfy each of the following conditions:
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You must deliver to Anheuser-Busch a written demand for
appraisal of your shares before the vote with respect to the
Merger is taken. This written demand for appraisal must be in
addition to and separate from any proxy or vote abstaining from
or voting against the adoption of the Merger Agreement. Voting
against or failing to vote for the adoption of the Merger
Agreement by itself does not constitute a demand for appraisal
within the meaning of Section 262.
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You must not vote in favor of the adoption of the Merger
Agreement. A vote in favor of the adoption of the Merger
Agreement, by proxy, over the Internet, by telephone or in
person, will constitute a waiver of your appraisal rights in
respect of the shares so voted and will nullify any previously
filed written demands for appraisal. If you fail to comply with
either of these conditions and the Merger is completed, you will
be entitled to receive the cash payment for your shares of
common stock as provided for in the Merger Agreement, but you
will have no appraisal rights with respect to your shares of
common stock.
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All demands for appraisal should be addressed to Anheuser-Busch
Companies, Inc., One Busch Place, St. Louis, Missouri
63118, Attention: Vice President and Secretary, and must be
delivered before the vote on the Merger Agreement is taken at
the special meeting, and should be executed by, or on behalf of,
the record holder of the shares of our common stock. The demand
must reasonably inform Anheuser-Busch of the identity of the
stockholder and the intention of the stockholder to demand
appraisal of his, her or its shares.
To be effective, a demand for appraisal by a holder of our
common stock must be made by, or in the name of, such registered
stockholder, fully and correctly, as the stockholders name
appears on his or her stock certificate(s). Beneficial owners
who do not also hold the shares of record may not directly make
appraisal demands to Anheuser-Busch. The beneficial holder must,
in such cases, have the registered owner, such as a broker or
other nominee, submit the required demand in respect of those
shares. If shares are owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution
of a demand for appraisal should be made by or for the
fiduciary; and if the shares are owned of record by more than
one person, as in a joint tenancy or tenancy in common, the
demand should be executed by or for all
78
joint owners. An authorized agent, including an authorized agent
for two or more joint owners, may execute the demand for
appraisal for a stockholder of record; however, the agent must
identify the record owner or owners and expressly disclose the
fact that, in executing the demand, he or she is acting as agent
for the record owner. A record owner, such as a broker, who
holds shares as a nominee for others, may exercise his or her
right of appraisal with respect to the shares held for one or
more beneficial owners, while not exercising this right for
other beneficial owners. In that case, the written demand should
state the number of shares as to which appraisal is sought.
Where no number of shares is expressly mentioned, the demand
will be presumed to cover all shares held in the name of the
record owner.
If you hold your shares of common stock in a brokerage
account or in other nominee form and you wish to exercise
appraisal rights, you should consult with your broker or the
other nominee to determine the appropriate procedures for the
making of a demand for appraisal by the nominee.
Within 10 days after the effective time of the Merger, the
surviving corporation must give written notice that the Merger
has become effective to each Anheuser-Busch stockholder who has
properly filed a written demand for appraisal and who did not
vote in favor of the Merger Agreement. At any time within
60 days after the effective time, any stockholder who has
demanded an appraisal has the right to withdraw the demand and
to accept the cash payment specified by the Merger Agreement for
his or her shares of common stock. Within 120 days after
the effective date of the Merger, any stockholder who has
complied with Section 262 shall, upon written request to
the surviving corporation, be entitled to receive a written
statement setting forth the aggregate number of shares not voted
in favor of the Merger Agreement and with respect to which
demands for appraisal rights have been received and the
aggregate number of holders of such shares. Such written
statement will be mailed to the requesting stockholder within
10 days after such written request is received by the
surviving corporation or within 10 days after expiration of
the period for delivery of demands for appraisal, whichever is
later. Within 120 days after the effective time, either the
surviving corporation or any stockholder who has complied with
the requirements of Section 262 may file a petition in the
Delaware Court of Chancery demanding a determination of the fair
value of the shares held by all stockholders entitled to
appraisal. Upon the filing of the petition by a stockholder,
service of a copy of such petition shall be made upon the
surviving corporation. The surviving corporation has no
obligation to file such a petition in the event there are
dissenting stockholders. Accordingly, the failure of a
stockholder to file such a petition within the period specified
could nullify the stockholders previously written demand
for appraisal.
If a petition for appraisal is duly filed by a stockholder and a
copy of the petition is delivered to the surviving corporation,
the surviving corporation will then be obligated, within
20 days after receiving service of a copy of the petition,
to provide the Court of Chancery with a duly verified list
containing the names and addresses of all stockholders who have
demanded an appraisal of their shares and with whom agreements
as to the value of their shares have not been reached by the
surviving corporation. After notice to dissenting stockholders
who demanded appraisal of their shares, the Court of Chancery is
empowered to conduct a hearing upon the petition, and to
determine those stockholders who have complied with
Section 262 and who have become entitled to the appraisal
rights provided thereby.
After determination of the stockholders entitled to appraisal of
their shares of our common stock, the Court of Chancery will
appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of
interest, if any. When the value is determined, the Court of
Chancery will direct the payment of such value, with interest
thereon accrued during the pendency of the proceeding, if the
Court of Chancery so determines, to the stockholders entitled to
receive the same, upon surrender by such holders of those
shares. Unless the Court of Chancery in its discretion
determines otherwise for good cause shown, interest from the
effective date of the Merger through the date of payment of the
judgment shall be compounded quarterly and shall accrue at 5%
over the Federal Reserve discount rate (including any surcharge)
as established from time to time during the period between the
effective date of the Merger and the date of payment of the
judgment.
In determining fair value, the Court of Chancery is required to
take into account all relevant factors. You should be aware
that the fair value of your shares as determined under
Section 262 could be more than,
79
the same as, or less than the value that you are entitled to
receive under the terms of the Merger Agreement.
Costs of the appraisal proceeding may be imposed upon the
surviving corporation and the stockholders participating in the
appraisal proceeding by the Court of Chancery as the Court of
Chancery deems equitable in the circumstances. Upon the
application of a stockholder, the Court of Chancery may order
all or a portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including, without
limitation, reasonable attorneys fees and the fees and
expenses of experts, to be charged pro rata against the value of
all shares entitled to appraisal. Any stockholder who had
demanded appraisal rights will not, after the effective time of
the Merger, be entitled to vote shares subject to that demand
for any purpose or to receive payments of dividends or any other
distribution with respect to those shares, other than with
respect to payment as of a record date prior to the effective
time of the Merger; however, if no petition for appraisal is
filed within 120 days after the effective time of the
Merger, or if the stockholder delivers a written withdrawal of
his or her demand for appraisal and an acceptance of the terms
of the Merger within 60 days after the effective time of
the Merger, then the right of that stockholder to appraisal will
cease and that stockholder will be entitled to receive the cash
payment for shares of his, her or its common stock pursuant to
the Merger Agreement. Any withdrawal of a demand for appraisal
made more than 60 days after the effective time of the
Merger may only be made with the written approval of the
surviving corporation and must, to be effective, be made within
120 days after the effective time.
In view of the complexity of Section 262,
Anheuser-Buschs stockholders who may wish to dissent from
the Merger and pursue appraisal rights should consult their
legal advisors.
SUBMISSION
OF STOCKHOLDER PROPOSALS
If the Merger is consummated, we will not have public
stockholders and there will be no public participation in any
future meeting of stockholders. However, if the Merger is not
completed or if we are otherwise required to do so under
applicable law, we would hold a 2009 annual meeting of
stockholders. We had previously set the deadline for submitting
proposals for inclusion in Anheuser-Buschs proxy statement
relating to the 2009 annual meeting to be November 10,
2008. Any stockholder proposal received after November 10,
2008 will not be considered timely for inclusion in the proxy
materials. Under our bylaws, in order for a stockholder proposal
submitted outside of
Rule 14a-8,
and therefore not included in our proxy materials, to be
considered timely, such proposal must be received by our
Corporate Secretary not later than the tenth business day
following the date on which notice of the date of the 2009
annual meeting is mailed to stockholders or we otherwise make
public disclosure of the date of such annual meeting, whichever
occurs first.
HOUSEHOLDING
OF SPECIAL MEETING MATERIALS
Some banks, brokers, and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
this notice and proxy statement may have been sent to multiple
stockholders in your household unless we have received contrary
instructions. If you would prefer to receive separate copies of
a proxy statement or annual report either now or in the future,
please contact BNY Mellon Shareowner Services, P.O.
Box 358015, Pittsburgh, PA 15252, attention: Shareholder
Correspondence. Upon written or oral request to BNY Mellon
Shareowner Services, we will provide a separate copy of the
annual reports and proxy statements. In addition, security
holders sharing an address can request delivery of a single copy
of annual reports or proxy statements if you are receiving
multiple copies upon written or oral request to BNY Mellon
Shareowner Services at the address stated above.
OTHER
MATTERS
At this time, we know of no other matters to be submitted to our
stockholders at the special meeting or any adjournment or
postponement of the special meeting. If any other matters
properly come before the special meeting or any adjournment or
postponement of the special meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they
represent in accordance with their best judgment.
80
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy any
document we file at the SECs public reference room located
at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference room. Our SEC
filings are also available to the public at the SECs
website at
http://www.sec.gov.
You also may obtain free copies of the documents Anheuser-Busch
files with the SEC by going to the Investors section
of our website at
www.anheuser-busch.com/Informationrequest.html. Our website
address is provided as an inactive textual reference only. The
information provided on our website is not part of this proxy
statement, and therefore is not incorporated by reference.
Reports, proxy statements or other information concerning us may
also be inspected at the offices of the NYSE at 20 Broad
Street, New York, New York 10005.
Statements contained in this proxy statement, or in any document
incorporated in this proxy statement by reference regarding the
contents of any contract or other document, are not necessarily
complete and each such statement is qualified in its entirety by
reference to that contract or other document filed as an exhibit
with the SEC. The SEC allows us to incorporate by
reference into this proxy statement documents we file with
the SEC. This means that we can disclose important information
to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this
proxy statement, and later information that we file with the SEC
will update and supersede that information. We incorporate by
reference the documents listed below and any documents filed by
us pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this proxy statement and before
the date of the special meeting:
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Annual Report on
Form 10-K
filed on February 29, 2008, and the amendment thereto filed
April 25, 2008;
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Quarterly Reports on
Form 10-Q
for the quarterly periods ended March 31, 2008 and
June 30, 2008; and
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Current Reports on
Form 8-K
filed on June 20, 2008, June 26, 2008 (three filings),
June 27, 2008, June 30, 2008, July 14, 2008,
July 16, 2008, August 12, 2008, August 19, 2008,
September 24, 2008, September 30, 2008 and
October 3, 2008.
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Notwithstanding the foregoing, information furnished under
Items 2.02 and 7.01 of any Current Report on
Form 8-K,
including the related exhibits, is not incorporated by reference
in this proxy statement.
Any person, including any beneficial owner, to whom this proxy
statement is delivered may request copies of proxy statements
and any of the documents incorporated by reference in this
document or other information concerning us, without charge, by
written or telephonic request directed to Anheuser-Busch
Investor Relations, One Busch Place, St. Louis, Missouri
63118, telephone:
(800) 342-5283,
on Anheuser-Buschs website at
www.anheuser-busch.com/Informationrequest.html or from the SEC
through the SECs website at the address provided above.
Documents incorporated by reference are available without
charge, excluding any exhibits to those documents unless the
exhibit is specifically incorporated by reference into those
documents.
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A
PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM
WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT
JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE
YOUR SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT
IS DATED OCTOBER 6, 2008. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF
ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY
STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE
CONTRARY.
81
Annex A
AGREEMENT
AND PLAN OF MERGER
By and Among
ANHEUSER-BUSCH COMPANIES, INC.,
INBEV N.V./S.A.
and
PESTALOZZI ACQUISITION CORP.
Dated as of July 13, 2008
A-1
TABLE OF
CONTENTS
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Page
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Article I
The Merger; Closing; Effective Time
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1.1.
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The Merger
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A-4
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1.2.
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Closing
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A-4
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1.3.
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Effective Time
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A-4
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Article II
Certificate of Incorporation and By-Laws of the Surviving
Corporation
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2.1.
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The Certificate of Incorporation
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A-5
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2.2.
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The By-Laws
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A-5
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Article III
Directors and Officers of the Surviving Corporation
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3.1.
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Directors
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A-5
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3.2.
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Officers
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A-5
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Article IV
Effect of the Merger on Capital Stock; Exchange of Certificates
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4.1.
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Effect on Capital Stock
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A-5
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4.2.
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Exchange of Certificates
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A-6
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4.3.
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Treatment of Stock Plans
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A-7
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4.4.
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Adjustments to Prevent Dilution
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A-8
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Article V
Representations and Warranties
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5.1.
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Representations and Warranties of the Company
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A-8
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5.2.
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Representations and Warranties of Parent and Merger Sub
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A-20
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Article VI
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Covenants
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6.1.
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Interim Operations
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A-23
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6.2.
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Acquisition Proposals
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A-25
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6.3.
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Proxy Filing; Information Supplied
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A-28
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6.4.
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Stockholders Meeting
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A-28
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6.5.
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Filings; Other Actions; Notification
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A-29
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6.6.
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Access and Reports
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A-31
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6.7.
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Stock Exchange Delisting
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A-31
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6.8.
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Publicity
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A-31
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6.9.
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Employee Benefits
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A-31
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6.10.
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Debt and Equity Financing
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A-33
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6.11.
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Expenses
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A-34
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6.12.
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Indemnification; Directors and Officers Insurance
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A-34
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6.13.
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Takeover Statutes
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A-35
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6.14.
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Communications
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A-36
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6.15.
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Release and Termination of Litigation
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A-36
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6.16.
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Retention Plan
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A-36
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6.17.
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Other Matters
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A-36
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A-2
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Page
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Article VII
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Conditions
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7.1.
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Conditions to Each Partys Obligation to Effect the Merger
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A-37
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7.2.
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Conditions to Obligations of Parent and Merger Sub
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A-37
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7.3.
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Conditions to Obligation of the Company
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A-38
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Article VIII
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Termination
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8.1.
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Termination by Mutual Consent
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A-38
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8.2.
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Termination by Either Parent or the Company
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A-38
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8.3.
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Termination by the Company
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A-38
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8.4.
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Termination by Parent
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A-39
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8.5.
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Effect of Termination and Abandonment
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A-39
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Article IX
Miscellaneous and General
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9.1.
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Survival
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A-40
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9.2.
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Modification or Amendment
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A-41
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9.3.
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Waiver of Conditions
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A-41
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9.4.
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Counterparts
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A-41
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9.5.
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GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL; SPECIFIC
PERFORMANCE
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A-41
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9.6.
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Notices
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A-42
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9.7.
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Entire Agreement
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A-43
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9.8.
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No Third Party Beneficiaries
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A-43
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9.9.
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Obligations of Parent and of the Company
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A-43
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9.10.
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Transfer Taxes
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A-44
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9.11.
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Definitions
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A-44
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9.12.
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Severability
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A-44
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9.13.
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Interpretation; Construction
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9.14.
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Assignment
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Annex A Defined Terms
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Annex B Charter
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AGREEMENT
AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this
Agreement), dated as of July 13,
2008, by and among Anheuser-Busch Companies, Inc., a Delaware
corporation (the Company), InBev
N.V./S.A., a
public company organized under the laws of Belgium
(Parent), and Pestalozzi Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of
Parent (Merger Sub, the Company and
Merger Sub sometimes being hereinafter collectively referred to
as the Constituent Corporations).
RECITALS
WHEREAS, the respective boards of directors of each of Parent,
Merger Sub and the Company have approved the merger of Merger
Sub with and into the Company (the
Merger) upon the terms and subject to
the conditions set forth in this Agreement and have approved and
declared advisable this Agreement;
WHEREAS, the board of directors of the Company has determined
that the Merger and the other transactions contemplated by this
Agreement are in the best interests of the Companys
stockholders and has resolved to recommend the approval of the
Merger to the Companys stockholders;
WHEREAS, the board of directors of Parent has determined that
the Merger and the other transactions contemplated by this
Agreement are in the best interests of Parent;
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, and in order to induce the Company to enter into
this Agreement, Parents controlling shareholder Stichting
InBev AK (the Stichting), has
delivered to the Company, a letter agreement (the
Parent Shareholder Commitment)
addressed to the board of directors of the Company with respect
to certain commitments made by such shareholder in connection
with this Agreement and the transactions contemplated by this
Agreement; and
WHEREAS, the Company, Parent and Merger Sub desire to make
certain representations, warranties, covenants and agreements in
connection with this Agreement;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained
herein, the parties hereto agree as follows:
ARTICLE I
The
Merger; Closing; Effective Time
1.1. The Merger. Upon the
terms and subject to the conditions set forth in this Agreement,
at the Effective Time (as defined in Section 1.3), Merger
Sub shall be merged with and into the Company and the separate
corporate existence of Merger Sub shall thereupon cease. The
Company shall be the surviving corporation in the Merger
(sometimes hereinafter referred to as the Surviving
Corporation), and the separate corporate existence
of the Company, with all its rights, privileges, immunities,
powers and franchises, shall continue unaffected by the Merger,
except as set forth in Article II. The Merger shall have
the effects specified in the Delaware General Corporation Law,
as amended (the DGCL).
1.2. Closing. Unless
otherwise mutually agreed in writing between the Company and
Parent, the closing for the Merger (the
Closing) shall take place at the
offices of Sullivan & Cromwell LLP, 125 Broad Street,
New York, New York, at 9:00 A.M. (Eastern Time) on the
third business day (the Closing Date)
following the day on which the last to be satisfied or waived of
the conditions set forth in Article VII (other than those
conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those
conditions) shall be satisfied or waived in accordance with this
Agreement. For purposes of this Agreement, the term
business day shall mean any day ending
at 11:59 P.M. (Eastern Time) other than a Saturday or
Sunday or a day on which banks are required or authorized to
close in New York, New York or London, England.
1.3. Effective Time. As soon
as practicable following the Closing, the Company and Parent
will cause a certificate of merger (the Delaware
Certificate of Merger) to be executed,
acknowledged and filed with
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the Secretary of State of the State of Delaware as provided in
Section 251 of the DGCL. The Merger shall become effective
at the time when the Delaware Certificate of Merger has been
duly filed with the Secretary of State of the State of Delaware
or at such later time as may be agreed by the parties in writing
and specified in the Delaware Certificate of Merger (the
Effective Time).
ARTICLE II
Certificate
of Incorporation and By-Laws of the Surviving
Corporation
2.1. The Certificate of
Incorporation. As of the Effective Time, the
certificate of incorporation of the Surviving Corporation (the
Charter) shall be amended in its
entirety to read as set forth in Annex B which Parent shall
provide to the Company prior to the Closing and which shall be
reasonably satisfactory to the Company, until thereafter amended
(subject to Section 6.12(b)) as provided therein or by
applicable Law.
2.2. The By-Laws. The
parties hereto shall take all actions necessary so that the
by-laws of Merger Sub in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation
(the By-Laws), until thereafter
amended (subject to Section 6.12(b)) as provided therein or
by applicable Law.
ARTICLE III
Directors
and Officers of the Surviving Corporation
3.1. Directors. The parties
hereto shall take all actions necessary so that the board of
directors of Merger Sub at the Effective Time shall, from and
after the Effective Time, be the directors of the Surviving
Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death,
resignation or removal in accordance with the Charter and the
By-Laws.
3.2. Officers. The parties
hereto shall take all actions necessary so that the officers of
the Company at the Effective Time shall, from and after the
Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal
in accordance with the Charter and the By-Laws.
ARTICLE IV
Effect of
the Merger on Capital Stock;
Exchange
of Certificates
4.1. Effect on Capital
Stock. At the Effective Time, as a result of
the Merger and without any action on the part of the holder of
any capital stock of the Company:
(a) Merger Consideration. Each
share of common stock, par value $1.00 per share, of the Company
(a Share or, collectively, the
Shares) issued and outstanding
immediately prior to the Effective Time other than
(i) Shares owned by Parent, Merger Sub or any other direct
or indirect wholly owned subsidiary of Parent and Shares owned
by the Company or any direct or indirect wholly owned subsidiary
of the Company, and in each case not held on behalf of third
parties, and (ii) Shares that are owned by stockholders
(Dissenting Stockholders) who have
perfected and not withdrawn a demand for appraisal rights
pursuant to Section 262 of the DGCL (each of the Shares
described in clauses (i) and (ii), an Excluded
Share and, collectively, the Excluded
Shares) shall be converted into the right to
receive $70.00 in cash per Share (the Per Share
Merger Consideration). At the Effective Time, all
of the Shares (other than Excluded Shares) shall cease to be
outstanding, shall be cancelled and shall cease to exist, and
each certificate (a Certificate)
formerly representing any of the Shares or non-certificated
Shares represented by book-entry (Book-Entry
Shares) (other than Excluded Shares) shall
thereafter represent only the right to receive the Per Share
Merger Consideration, without interest.
(b) Cancellation of Excluded
Shares. Each Excluded Share shall, by virtue
of the Merger and without any action on the part of the holder
of the Excluded Share, cease to be outstanding, be cancelled
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without payment of any consideration therefor and shall cease to
exist, subject to any rights the holder thereof may have under
Section 4.2(f), except for Excluded Shares owned by Parent,
the Company or any direct or indirect wholly owned subsidiary of
Parent or the Company, and in each case not held on behalf of
third parties, which shall remain outstanding and unaffected by
the Merger.
(c) Merger Sub. At the Effective
Time, each share of common stock, par value $0.01 per share, of
Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common
stock, par value $0.01 per share, of the Surviving Corporation.
4.2. Exchange of
Certificates.
(a) Paying Agent. Simultaneously
with the Effective Time, Parent shall deposit, or shall cause to
be deposited, with a paying agent selected by Parent with the
Companys prior approval (such approval not to be
unreasonably withheld or delayed) (the Paying
Agent), for the benefit of the holders of Shares,
a cash amount in immediately available funds sufficient for the
Paying Agent to make payments (i) under Section 4.1(a)
and (ii) in respect of Company Options pursuant to
Section 4.3(a) and Company Awards pursuant to
Section 4.3(b) (such aggregate cash amount in
clauses (i) and (ii) being hereinafter referred to as
the Exchange Fund). The Paying Agent
shall invest the Exchange Fund as directed by Parent;
provided that such investments shall be in obligations of
or guaranteed by the United States of America in commercial
paper obligations rated
A-1 or
P-1 or
better by Moodys Investors Service, Inc. or
Standard & Poors Corporation, respectively, in
certificates of deposit, bank repurchase agreements or
bankers acceptances of commercial banks with capital
exceeding $1 billion, or in money market funds having a
rating in the highest investment category granted by a
recognized credit rating agency at the time of acquisition or a
combination of the foregoing and, in any such case, no such
instrument shall have a maturity exceeding three months. Any
interest and other income resulting from such investments shall
become a part of the Exchange Fund, and any amounts in excess of
the amounts payable under Section 4.1(a) shall be promptly
returned to Parent.
(b) Exchange Procedures. Promptly
after the Effective Time (and in any event within (x) five
business days in the case of record holders and (y) three
business days in the case of the Depository Trust Company
(DTC) on behalf of street
holders), the Surviving Corporation shall cause the Paying Agent
to mail (or in the case of DTC, deliver) to each holder of
record of Shares (other than holders of Excluded Shares)
(i) a letter of transmittal in customary form specifying
that delivery shall be effected, and risk of loss and title to
the Certificates or Book-Entry Shares shall pass, only upon
delivery of the Certificates (or affidavits of loss in lieu of
the Certificates as provided in Section 4.2(e)) or
Book-Entry Shares to the Paying Agent, such letter of
transmittal to be in such form and have such other provisions as
Parent and the Company may reasonably agree, and
(ii) instructions for use in effecting the surrender of the
Certificates (or affidavits of loss in lieu of the Certificates
as provided in Section 4.2(e)) or Book-Entry Shares in
exchange for the Per Share Merger Consideration. Upon surrender
of a Certificate (or affidavit of loss in lieu of the
Certificate as provided in Section 4.2(e)) or Book-Entry
Shares to the Paying Agent in accordance with the terms of such
letter of transmittal, duly executed, the holder of such
Certificate or Book-Entry Shares shall be entitled to receive in
exchange therefor a cash amount in immediately available funds
(after giving effect to any required tax withholdings as
provided in Section 4.2(g)) equal to (x) the number of
Shares represented by such Certificate (or affidavit of loss in
lieu of the Certificate as provided in Section 4.2(e)) or
Book-Entry Shares multiplied by (y) the Per Share Merger
Consideration, and the Certificate or Book-Entry Shares so
surrendered shall forthwith be cancelled. No interest will be
paid or accrued on any amount payable upon due surrender of the
Certificates or Book-Entry Shares. In the event of a transfer of
ownership of Shares that is not registered in the transfer
records of the Company, a check for any cash to be exchanged
upon due surrender of the Certificate or Book-Entry Shares may
be issued to such transferee if the Certificate or Book-Entry
Shares formerly representing such Shares is presented to the
Paying Agent, accompanied by all documents reasonably required
to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid or are not
applicable.
(c) Transfers. From and after the
Effective Time, there shall be no transfers on the stock
transfer books of the Company of the Shares that were
outstanding immediately prior to the Effective Time. If, after
the Effective Time, any Certificate or Book-Entry Shares are
presented to the Surviving Corporation, Parent or the
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Paying Agent for transfer, such Certificates or Book-Entry
Shares shall be cancelled and exchanged for the cash amount in
immediately available funds to which the holder of the
Certificate or Book-Entry Shares is entitled pursuant to this
Article IV.
(d) Termination of Exchange
Fund. Any portion of the Exchange Fund
(including the proceeds of any investments of the Exchange Fund)
that remains unclaimed by the stockholders of the Company for
nine (9) months after the Effective Time shall be delivered
to the Surviving Corporation. Any holder of Shares (other than
Excluded Shares) who has not theretofore complied with this
Article IV shall thereafter look only to the Surviving
Corporation for payment of the Per Share Merger Consideration
(after giving effect to any required tax withholdings as
provided in Section 4.2(g)) upon due surrender of its
Certificates (or affidavits of loss in lieu of the Certificates)
or Book-Entry Shares, without any interest thereon.
Notwithstanding the foregoing, none of the Surviving
Corporation, Parent, the Paying Agent or any other Person shall
be liable to any former holder of Shares for any amount properly
delivered to a public official pursuant to applicable abandoned
property, escheat or similar Laws. For the purposes of this
Agreement, the term Person shall mean
any individual, corporation (including not-for-profit), general
or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, Governmental
Entity (as defined in Section 5.1(d)(i)) or other entity of
any kind or nature.
(e) Lost, Stolen or Destroyed
Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate
to be lost, stolen or destroyed and, if required by Parent, the
posting by such Person of a bond in customary amount and upon
such terms as may be required by Parent as indemnity against any
claim that may be made against it or the Surviving Corporation
with respect to such Certificate, the Paying Agent will issue a
check in the amount (after giving effect to any required tax
withholdings) equal to the number of Shares represented by such
lost, stolen or destroyed Certificate multiplied by the Per
Share Merger Consideration.
(f) Appraisal Rights. No Person
who has perfected a demand for appraisal rights pursuant to
Section 262 of the DGCL shall be entitled to receive the
Per Share Merger Consideration with respect to the Shares owned
by such Person unless and until such Person shall have
effectively withdrawn or lost such Persons right to
appraisal under the DGCL. Each Dissenting Stockholder shall be
entitled to receive only the payment provided by
Section 262 of the DGCL with respect to Shares owned by
such Dissenting Stockholder. The Company shall give Parent
(i) prompt notice of any written demands for appraisal,
attempted withdrawals of such demands, and any other instruments
served pursuant to applicable Law that are received by the
Company relating to stockholders rights of appraisal and
(ii) the opportunity to direct all negotiations and
proceedings with respect to demand for appraisal under the DGCL.
The Company shall not, except with the prior written consent of
Parent, voluntarily make any payment with respect to any demands
for appraisal, offer to settle or settle any such demands or
approve any withdrawal of any such demands.
(g) Withholding Rights. Each of
Parent, the Surviving Corporation and the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such
amounts as it reasonably determines in good faith it is required
to deduct and withhold with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the
Code), or any other applicable state,
local or foreign Tax (as defined in Section 5.1(n)) Law. To
the extent that amounts are so withheld by Parent, the Surviving
Corporation or the Paying Agent, as the case may be, such
withheld amounts (i) shall be remitted by Parent, the
Surviving Corporation or the Paying Agent, as applicable, to the
applicable Governmental Entity, and (ii) shall be treated
for all purposes of this Agreement as having been paid to the
holder of Shares in respect of which such deduction and
withholding was made by Parent, the Surviving Corporation or the
Paying Agent, as the case may be.
4.3. Treatment of Stock
Plans.
(a) Treatment of Options. At the
Effective Time, each outstanding option to purchase Shares (a
Company Option) under the Stock Plans
(as defined in Section 5.1(b)(i)), vested or unvested,
shall be cancelled and converted into the right to receive, as
soon as reasonably practicable (and in no event later than three
(3) business days) after the Effective Time, an amount in
cash equal to the product of (x) the total number of Shares
subject to the Company Option times (y) the excess, if any,
of the Per Share Merger
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Consideration over the exercise price per Share under such
Company Option, less applicable Taxes required to be withheld
with respect to such payment.
(b) Company Awards. At the
Effective Time, each right of any kind, contingent or accrued,
to acquire or receive Shares or benefits measured by the value
of Shares, and each award of any kind consisting of Shares that
may be held, awarded, outstanding, payable or reserved for
issuance under the Stock Plans and any other Company Benefit
Plans (as defined in Section 5.1(h)(i)), other than Company
Options (the Company Awards), vested
or unvested, shall be cancelled and converted into the right to
receive, as soon as reasonably practicable (but in no event
later than three (3) business days) after the Effective
Time, an amount in cash equal to (x) the number of Shares
subject to such Company Awards immediately prior to the
Effective Time times (y) the Per Share Merger Consideration
(or, if the Company Award provides for payments to the extent
the value of the Shares exceed a specified reference price, the
amount, if any, by which the Per Share Merger Consideration
exceeds such reference price), less applicable Taxes required to
be withheld with respect to such payment.
(c) Termination of Plan. The
Companys Global Employee Stock Purchase Plan shall
terminate as of immediately prior to the Effective Time and no
new share offering date shall commence after the date hereof.
Any amounts withheld and contributed to a savings account on
behalf of a participating employee of the Company or its
Subsidiaries and held in such savings account immediately prior
to the Effective Time shall be refunded to such participating
employee as soon as reasonably practicable (but in no event
later than three (3) business days).
(d) Corporate Actions. At or prior
to the Effective Time, the Company, the board of directors of
the Company or the compensation committee of the board of
directors of the Company, as applicable, shall adopt any
resolutions and take any actions which are reasonably necessary
to effectuate the provisions of Sections 4.3(a), 4.3(b) and
4.3(c). The Company shall take all reasonable actions necessary
to ensure that from and after the Effective Time neither Parent
nor the Surviving Corporation will be required to deliver Shares
or other capital stock of the Company to any Person pursuant to
or in settlement of Company Options or Company Awards or
otherwise.
4.4. Adjustments to Prevent
Dilution. In the event that the Company
changes the number of Shares or securities convertible or
exchangeable into or exercisable for Shares issued and
outstanding prior to the Effective Time as a result of a
reclassification, stock split (including a reverse stock split),
stock dividend or distribution, recapitalization, merger, issuer
tender or exchange offer, or other similar transaction, the Per
Share Merger Consideration shall be equitably adjusted.
ARTICLE V
Representations
and Warranties
5.1. Representations and Warranties of the
Company. Except as set forth in the Company
Reports (as defined in Section 5.1(e)(i)) filed with the
Securities and Exchange Commission (the
SEC) prior to the date of this
Agreement (excluding, in each case, any disclosures set forth in
any risk factor section or in any other section to the extent
they are forward looking statements or cautionary, predictive or
forward-looking in nature) or in the corresponding sections or
subsections of the disclosure schedule delivered to Parent by
the Company prior to entering into this Agreement (the
Company Disclosure Schedule) (it being
agreed that disclosure of any item in any section or subsection
of the Company Disclosure Schedule shall be deemed disclosure
with respect to any other section or subsection to which the
relevance of such item is reasonably apparent), the Company
hereby represents and warrants to Parent and Merger Sub that:
(a) Organization, Good Standing and
Qualification. Each of the Company and its
Subsidiaries is a legal entity duly organized, validly existing
and in good standing under the Laws of its respective
jurisdiction of organization and has all requisite corporate or
similar power and authority to own, lease and operate its
properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good
standing as a foreign corporation or other legal entity in each
jurisdiction where the ownership, leasing or operation of its
assets or properties or conduct of its business requires such
qualification, except where the
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failure to be so organized, qualified or in good standing, or to
have such power or authority, is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect
or prevent or materially impair the consummation of the
transactions contemplated by this Agreement. The Company has
made available to Parent complete and correct copies of the
Companys certificate of incorporation and by-laws, each as
amended to the date of this Agreement, and each as so delivered
is in full force and effect.
As used in this Agreement, the term
(i) Subsidiary means, with
respect to any Person, any other Person of which at least a
majority of the securities or ownership interests having by
their terms ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions
is directly or indirectly owned or controlled by such Person
and/or by
one or more of its Subsidiaries;
(ii) Significant Subsidiary is as
defined in Rule 1.02(w) of
Regulation S-X
promulgated pursuant to the Securities Exchange Act of 1934, as
amended (the Exchange Act);
(iii) Joint Venture means
Tsingtao Brewery Company, Ltd.; and
(iv) Material Adverse Effect
means a material adverse effect on the financial condition,
business or results of operations of the Company and its
Subsidiaries taken as a whole; provided, that none of the
following, in and of itself or themselves, shall constitute (or
be taken into account in determining the occurrence of) a
Material Adverse Effect:
(A) effects resulting from changes in the economy or
financial, credit, banking, currency, commodities or capital
markets generally in the United States or other countries in
which the Company conducts material operations or any changes in
currency exchange rates, interest rates, monetary policy or
inflation;
(B) effects resulting from changes that are the result of
factors generally affecting the beer, packaging or theme park
industries;
(C) effects resulting from changes in Law or in United
States generally accepted accounting principles
(GAAP) or rules and policies of the
Public Company Accounting Oversight Board;
(D) any act of God or other calamity, national or
international, political or social conditions (including the
engagement by any country in hostilities, whether commenced
before or after the date hereof, and whether or not pursuant to
the declaration of a national emergency or war), or the
occurrence of any military or terrorist attack;
(E) effects resulting from any failure by the Company to
meet any estimates of revenues or earnings on or after the date
of this Agreement, provided that the exception in this
clause (E) shall not prevent or otherwise affect any
change, effect, circumstance or development underlying such
failure from being taken into account in determining whether a
Material Adverse Effect has occurred;
(F) (i) the announcement or the existence of this
Agreement and the transactions contemplated hereby (including
any related or resulting loss of or change in relationship with
any customer, supplier, distributor, wholesaler or other
business partner, or departure of any employee or officer, or
any litigation or other proceeding), including by reason of the
identity of Parent or any plans or intentions of Parent with
respect to the conduct of the business of any of the Company or
its Subsidiaries or (ii) compliance with the terms of, or
any actions taken pursuant to, this Agreement, or any failures
to take action which is prohibited by this Agreement, or such
other changes or events to which Parent has expressly consented
in writing; or
(G) any item or items set forth in Section 5.1(a)(G)
of the Company Disclosure Letter;
provided, however, that, with respect to clauses
(A), (B), (C) and (D), any effects resulting from any
change, event, circumstance or development that
disproportionately adversely affects the Company and its
Subsidiaries compared to other companies operating in the beer,
packaging or theme park industries, as the case may be, shall be
considered for purposes of determining whether a Material
Adverse Effect has occurred, but only to the extent of such
disproportionate effect.
(b) Capital Structure.
(i) The authorized capital stock of the Company consists of
1,600,000,000 Shares, of which, as of the close of business
on June 30, 2008, 719,042,325 Shares (including
outstanding shares of restricted stock) were
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outstanding and 774,890,269 Shares were held in treasury
and 40,000,000 shares of preferred stock, of which no
shares are outstanding. All of the outstanding Shares have been
duly authorized and are validly issued, fully paid and
nonassessable. Other than (i) 819,677 Shares reserved
for issuance under the Companys 1989 Incentive Stock Plan,
1998 Incentive Stock Plan and Global Employee Stock Purchase
Plan and (ii) 35,110,917 Shares reserved for delivery
out of the Companys treasury pursuant to the 2007 Equity
and Incentive Plan, the Stock Plan for Non-Employee Directors,
the 2006 Restricted Plan for Non-Employee Directors, the 2008
Long-Term Incentive Plan for Non-Employee Directors, and the
Non-Employee Director Elective Stock Purchase Plan (the plans
referred to in clauses (i) and (ii) being collectively
referred to as the Stock Plans), the
Company has no Shares reserved for issuance or delivery. As of
the close of business on June 30, 2008, there were
88,718,052 options outstanding and 930,953 shares of
restricted stock outstanding under the Stock Plans. Each of the
outstanding shares of capital stock or other securities of each
of the Companys wholly-owned Subsidiaries, which are set
forth in Section 5.1(b)(i)(A) of the Company Disclosure
Schedule (Wholly Owned Subsidiaries),
are duly authorized, validly issued, fully paid and
nonassessable and owned by the Company or by a direct or
indirect wholly owned Subsidiary of the Company, free and clear
of any lien, charge, pledge, security interest, claim or other
encumbrance (each, a Lien) other than
transfer restrictions arising pursuant to applicable securities
Laws. Each of the outstanding shares of capital stock or other
securities that are directly or indirectly owned by the Company
of each of the Companys Subsidiaries that are not Wholly
Owned Subsidiaries, which are set forth in Section 5.1(b)(i)(A)
of the Company Disclosure Schedule (Non-Wholly Owned
Subsidiaries), are duly authorized, validly
issued, fully paid and nonassessable and owned by the Company or
by a direct or indirect Wholly Owned Subsidiary, free and clear
of any Lien other than transfer restrictions arising pursuant to
applicable securities Laws. Except as set forth in
Sections 5.1(b)(i)(A) or 5.1(b)(i)(B) of the Company
Disclosure Schedule, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights,
agreements, arrangements, calls, commitments or rights of any
kind that obligate the Company or any of its Subsidiaries to
issue or sell any shares of capital stock or other securities of
the Company or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any
securities of the Company or any of its Subsidiaries, and no
securities or obligations evidencing such rights are authorized,
issued or outstanding. The Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable
for securities having the right to vote) with the stockholders
of the Company on any matter.
(ii) In all material respects, each Company Option
(A) was granted in compliance with all applicable Laws and
all of the terms and conditions of the Stock Plan pursuant to
which it was issued, (B) has an exercise price per Share
equal to or greater than the fair market value of a Share on the
date of such grant, (C) has a grant date identical to the
date on which the Companys board of directors or
compensation committee actually awarded such Company Option,
(D) qualifies for the Tax (as defined in
Section 5.1(n)) and accounting treatment afforded to such
Company Option in the Companys Tax Returns (as defined in
Section 5.1(n)) and the Company Reports (as defined in
Section 5.1(e)), respectively, and (E) is not deferred
compensation under Section 409A of the Code.
(c) Corporate Authority; Approval and
Fairness.
(i) The Company has all requisite corporate power and
authority and has taken all corporate action necessary in order
to execute, deliver and perform its obligations under this
Agreement and to consummate the Merger, subject only to adoption
of this Agreement by the holders of a majority of the
outstanding Shares entitled to vote on such matter at a
stockholders meeting duly called and held for such purpose
(the Requisite Company Vote). This
Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar Laws of general
applicability relating to or affecting creditors rights
and to general equity principles (the Bankruptcy and
Equity Exception).
(ii) Subject to Section 6.2, the board of directors of
the Company has (A) unanimously determined that the Merger
is fair to, and in the best interests of, the Company and its
stockholders, approved and declared
A-10
advisable this Agreement and the Merger and the other
transactions contemplated hereby and resolved to recommend
adoption of this Agreement to the holders of Shares (the
Company Recommendation),
(B) directed that this Agreement be submitted to the
holders of Shares for their adoption and (C) received the
opinions of its financial advisors, Goldman, Sachs &
Co. and Citigroup Global Markets, Inc., to the effect that, as
of the date of this Agreement and based upon and subject to the
qualifications and assumptions set forth therein, the Per Share
Merger Consideration is fair from a financial point of view to
such holders (other than Parent and its Subsidiaries) of Shares.
True and correct copies of the foregoing opinions have been (or,
if not received by the Companys board of directors prior
to the execution and delivery of this Agreement, promptly will
be) delivered to Parent. It is agreed and understood that such
opinion is for the benefit of the Companys board of
directors and may not be relied upon by Parent or Merger Sub.
(d) Governmental Filings; No Violations; Certain
Contracts.
(i) Other than the filings
and/or
notices pursuant to Section 1.3, under the Exchange Act and
the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR Act) and any notices to, approvals
of, or consents or clearances by, any other Governmental
Antitrust Entity (collectively, the Company
Approvals), no notices, reports or other filings
are required to be made by the Company with, nor are any
consents, registrations, approvals, permits or authorizations
required to be obtained by the Company from, any domestic,
multinational or foreign governmental or regulatory authority,
agency, commission, body, court or other legislative, executive
or judicial governmental entity (each a Governmental
Entity), in connection with the execution,
delivery and performance of this Agreement by the Company and
the consummation of the Merger and the other transactions
contemplated hereby, or in connection with the continuing
operation of the business of the Company and its Subsidiaries
following the Effective Time, except those that the failure to
make or obtain are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect or prevent
or materially impair the consummation of the transactions
contemplated by this Agreement.
(ii) The execution, delivery and performance of this
Agreement by the Company does not, and the consummation of the
Merger and the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of, or a
default under, the certificate of incorporation or by-laws of
the Company or the comparable governing documents of any of its
Significant Subsidiaries, (B) with or without notice, lapse
of time or both, a material breach or violation of, assuming
(solely with respect to performance of this Agreement and
consummation of the Merger and the other transactions
contemplated hereby), compliance with the matters referred to in
Section 5.1(d)(i), any Law to which the Company or any of
its Significant Subsidiaries is subject, (C) with or
without notice, lapse of time or both, a breach or violation of,
a termination, cancellation or modification (or right of
termination, cancellation or modification) or default under, the
payment of additional fees, the creation or acceleration of any
obligations under or the creation of a Lien on any of the assets
of the Company or any of its Significant Subsidiaries pursuant
to any agreement, lease, license, contract, settlement, consent,
note, mortgage or indenture not otherwise terminable by the
other party thereto on 90 days or less notice (each,
a Contract) binding upon the Company
or any of its Subsidiaries, (D) a breach or violation of or
a termination, cancellation or modification (or right of
termination, cancellation or modification) or default or right
of first refusal or similar right under any investment
agreement, shareholders agreement or any other similar agreement
with respect to a Joint Venture to which the Company or any of
its Subsidiaries is a party or by which any of them are
otherwise bound, or (E) any change in the rights or
obligations of any party under any Contract binding upon the
Company or any of its Subsidiaries or Joint Ventures, except, in
the case of clause (C), (D) or (E) above, for any such
breach, violation, termination, default, creation, acceleration
or change that is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect or prevent
or materially impair the consummation of the transactions
contemplated by this Agreement.
(e) Company Reports; Financial
Statements.
(i) The Company has filed or furnished, as applicable, on a
timely basis, all forms, statements, certifications, reports and
documents required to be filed or furnished by it with the SEC
pursuant to the Exchange Act or the Securities Act of 1933, as
amended (the Securities Act), since
December 31, 2006
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(the Applicable Date) (the forms,
statements, reports and documents filed or furnished since the
Applicable Date and those filed or furnished subsequent to the
date of this Agreement, including any amendments thereto, the
Company Reports). Each of the Company
Reports, at the time of its filing or being furnished complied
or, if not yet filed or furnished, will comply in all material
respects with the applicable requirements of the Securities Act,
the Exchange Act and the Sarbanes-Oxley Act of 2002 (the
Sarbanes-Oxley Act), and any rules and
regulations promulgated thereunder applicable to the Company
Reports. As of their respective dates (or, if amended prior to
the date of this Agreement, as of the date of such amendment),
the Company Reports did not, and any Company Reports filed with
or furnished to the SEC subsequent to the date of this Agreement
will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. The
Companys derivatives activities and business are
substantially as described in the Companys 2007 Annual
Report.
(ii) The Company is in compliance in all material respects
with the applicable listing and corporate governance rules and
regulations of the New York Stock Exchange (the
NYSE). Except as permitted by the
Exchange Act, including Section 13(k)(2) and
Section 13(k)(3) thereof or the rules of the SEC, since the
enactment of the Sarbanes-Oxley Act, neither the Company nor any
of its Subsidiaries has made, arranged or modified (in any
material way) any extensions of credit in the form of a personal
loan to any executive officer or director of the Company or any
of their respective Affiliates. For purposes of this Agreement,
the term Affiliate when used with
respect to any party shall mean any Person who is an
affiliate of that party within the meaning of
Rule 405 promulgated under the Securities Act.
(iii) The Company maintains disclosure controls and
procedures required by
Rule 13a-15
or 15d-15
under the Exchange Act. Such disclosure controls and procedures
are designed to provide reasonable assurance that information
required to be disclosed by the Company is recorded and reported
on a timely basis to the individuals responsible for the
preparation of the Companys filings with the SEC and other
public disclosure documents. The Company maintains internal
control over financial reporting (as defined in
Rule 13a-15
or 15d-15,
as applicable, under the Exchange Act). Such internal control
over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in
accordance with GAAP and includes policies and procedures that
(i) pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions
and dispositions of the asset of the Company, (ii) provide
reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
GAAP, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management
and directors of the Company, and (iii) provide reasonable
assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the
Companys assets that could have a material effect on its
financial statements. The Company has disclosed, based on the
most recent evaluation of its chief executive officer and its
chief financial officer prior to the date of this Agreement, to
the Companys auditors and the audit committee of the
Companys board of directors (A) any significant
deficiencies in the design or operation of its internal controls
over financial reporting that are reasonably likely to adversely
affect the Companys ability to record, process, summarize
and report financial information and has identified for the
Companys auditors and audit committee of the
Companys board of directors any material weaknesses in
internal control over financial reporting and (B) any
fraud, whether or not material, that involves management or
other employees who have a significant role in the
Companys internal control over financial reporting.
(iv) Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including
the related notes and schedules) fairly presents, or, in the
case of Company Reports filed after the date of this Agreement,
will fairly present, in all material respects, the consolidated
financial position of the Company and its consolidated
Subsidiaries as of its date, and each of the consolidated
statements of income, changes in shareholders equity and
cash flows included in or incorporated by reference into the
Company Reports (including any related notes and schedules)
fairly presents, or in the case of Company Reports filed after
the date of this Agreement, will fairly present, in all material
respects, the results of operations, retained earnings and
changes in financial position, as the case may be, of such
companies for the periods set forth therein (subject, in the
case of unaudited statements, to notes and normal year-end audit
A-12
adjustments), in each case in accordance with GAAP consistently
applied during the periods involved, except as may be noted
therein.
(f) Absence of Certain
Changes. Since December 31, 2007,
(i) the Company and its Subsidiaries have conducted their
respective businesses in all material respects in the ordinary
course of business consistent with past practice, and
(ii) there has not been:
(A) any change in the financial condition, business or
results of their operations or any circumstance, occurrence or
development of which the Company has knowledge which,
individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect;
(B) other than regular quarterly dividends on Shares of
$0.33 per Share (or with respect to periods after the date
hereof, $0.37 per Share), any declaration, setting aside or
payment of any dividend or other distribution with respect to
any shares of capital stock of the Company or any of its
Subsidiaries (except for dividends or other distributions by any
Subsidiary to the Company or to any Subsidiary of the Company);
(C) any material change in any method of accounting or
accounting practice by the Company or any of its Subsidiaries;
(D) except as expressly permitted by this Agreement,
(1) any increase in the compensation or benefits payable or
to become payable to its officers or employees (except for
increases in the ordinary course of business and consistent with
past practice) or (2) any establishment, adoption, entry
into or amendment of any collective bargaining, bonus, profit
sharing, equity, thrift, compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or
employee, except to the extent required by applicable
Law; or
(E) any agreement to do any of the foregoing.
As used in this Agreement, the term
knowledge when used in the phrases
to the knowledge of the Company, the
Companys knowledge, of which the Company has
knowledge, or the Company has no knowledge or
words of similar import shall mean the knowledge of the Persons
listed in Section 5.1(f) of the Company Disclosure Schedule.
(g) Litigation and
Liabilities. There are no civil, criminal,
administrative or other actions, suits, claims, oppositions,
litigations, hearings, arbitrations, investigations or other
proceedings (Actions) pending or, to
the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or obligations or liabilities of the
Company or any of its Subsidiaries, whether or not accrued,
contingent or otherwise, that would be required to be reflected
or reserved against in a consolidated balance sheet of the
Company and its Subsidiaries
(Liabilities) or the notes thereto if
such balance sheet was prepared as of the date hereof, except
(i) as reflected or reserved against in the Companys
consolidated balance sheets (and the notes thereto) included in
the Company Reports filed after the Applicable Date but prior to
the date of this Agreement, (ii) for obligations or
Liabilities incurred in the ordinary course of business since
December 31, 2007, or (iii) for obligations or
Liabilities incurred pursuant to the transactions contemplated
by this Agreement, or (iv) for those that are not,
individually or in the aggregate, reasonably likely to have a
Material Adverse Effect or prevent or materially impair the
consummation of the transactions contemplated by this Agreement.
Neither the Company nor any of its Subsidiaries is a party to or
subject to the provisions of any judgment, order, writ,
injunction, decree, award, stipulation or settlement
(Judgment) of any Governmental Entity
which is, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect or prevent or materially impair
the consummation of the transactions contemplated by this
Agreement.
(h) Employee Benefits.
(i) All material benefit and compensation plans, employment
agreements, contracts, policies or arrangements covering current
or former employees of the Company and its Subsidiaries (the
Employees) and current or former
directors of the Company, including, but not limited to,
employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended (ERISA), and
deferred compensation, severance, stock option, stock purchase,
stock appreciation rights, Company stock-
A-13
based, incentive and bonus plans (the Company
Benefit Plans), other than Company Benefit Plans
maintained outside of the United States primarily for the
benefit of Employees working outside of the United States (such
plans hereinafter being referred to as Company
Non-U.S. Benefit
Plans), are listed in Section 5.1(h)(i) of the
Company Disclosure Schedule. True and complete copies of all
Company Benefit Plans listed in Section 5.1(h)(i) of the
Company Disclosure Schedule, including any trust instruments,
insurance contracts, actuarial reports and, with respect to any
employee stock ownership plan, loan agreements forming a part of
any Company Benefit Plans, and all amendments thereto have been
provided or made available to Parent or will be made available
to Parent within ten (10) days following the date hereof.
(ii) All Company Benefit Plans, other than
multiemployer plans within the meaning of
Section 3(37) of ERISA (each, a Multiemployer
Plan) and Company
Non-U.S. Benefit
Plans (collectively, Company U.S. Benefit
Plans) are in material compliance with ERISA, the
Code and other applicable Laws. Each Company U.S. Benefit
Plan which is subject to ERISA (a Company ERISA
Plan) that is an employee pension benefit
plan within the meaning of Section 3(2) of ERISA (a
Company Pension Plan) intended to be
qualified under Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service
(the IRS) covering all tax Law changes
prior to the Economic Growth and Tax Relief Reconciliation Act
of 2001 or has applied to the IRS for such favorable
determination letter within the applicable remedial amendment
period under Section 401(b) of the Code, and the Company is
not aware of any circumstances likely to result in the loss of
the qualification of such Plan under Section 401(a) of the
Code except for any such loss that would not, individually or in
the aggregate, reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries
has engaged in a transaction with respect to any Company ERISA
Plan that, assuming the taxable period of such transaction
expired as of the date of this Agreement, could subject the
Company or any Subsidiary to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA
except that would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(iii) Except for those that would not, individually or in
the aggregate, reasonably be expected to result in a Material
Adverse Effect, (A) no liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by
the Company or any of its Subsidiaries with respect to any
ongoing, frozen or terminated single-employer plan,
within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or
Section 414 of the Code (an ERISA
Affiliate); (B) the Company and its
Subsidiaries have not incurred and do not expect to incur any
material withdrawal liability with respect to a Multiemployer
Plan under Subtitle E of Title IV of ERISA (regardless of
whether based on contributions of an ERISA Affiliate);
(C) no notice of a reportable event, within the
meaning of Section 4043 of ERISA for which the reporting
requirement has not been waived or extended, other than pursuant
to Pension Benefit Guaranty Corporation
(PBGC) Reg. Section 4043.33 or
4043.66, has been required to be filed for any Company Pension
Plan or by any ERISA Affiliate within the
12-month
period ending on the date hereof or will be required to be filed
in connection with the transaction contemplated by this
Agreement.
(iv) As of the date of this Agreement, there is no pending
or, to the knowledge of the Company threatened, claims or
litigation relating to the Company Benefit Plans, except that
would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has any material obligations
for retiree health and life benefits under any Company ERISA
Plan or collective bargaining agreement.
(v) Neither the execution of this Agreement, shareholder
approval of this Agreement nor the consummation of the
transactions contemplated hereby will (x) entitle any
employees of the Company or any of its Subsidiaries to severance
pay or any increase in severance pay upon any termination of
employment after the date of this Agreement, or
(y) accelerate the time of payment or vesting or result in
any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or
result in any other material obligation pursuant to, any of the
Company Benefit Plans. Section 5.1(h)(v) of the Company
Disclosure Schedule separately lists the potential cash
severance amounts (including each component of each such cash
severance amount) payable to each executive officer upon a
qualifying termination after the Effective Time.
A-14
(vi) Neither the execution of this Agreement, shareholder
approval of this Agreement nor the consummation of the
transactions contemplated hereby will result in payments under
any of the Company Benefit Plans which would not be deductible
under Section 280G of the Code. Section 5.1(h)(v) of the
Company Disclosure Schedule separately lists any Company Benefit
Plans that provide for a
Section 4999 gross-up
or cut back.
(vii) All Company Benefit Plans that are nonqualified
deferred compensation plans (within the meaning of
Section 409A of the Code) have been maintained and
administered in material good faith operational compliance with
the requirements of Section 409A of the Code and any
regulations or other guidance issued thereunder. No Company
Benefit Plan provides for a Section 409A
gross-up or
indemnity.
(viii) All Company
Non-U.S. Benefit
Plans comply in all material respects with applicable Law,
except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
As of the date of this Agreement, there is no pending or, to the
knowledge of the Company, threatened material claims or
litigation relating to Company
Non-U.S. Benefit
Plans.
(i) Compliance with Laws;
Licenses. The businesses of each of the
Company and its Subsidiaries (including the ownership and
maintenance of all its assets, including the Owned Real Property
(as defined in Section 5.1(k)(i))) have not, since
December 31, 2006, been, and are not being, conducted in
violation of any applicable federal, state, local, multinational
or foreign law, statute or ordinance, common law, or any rule,
regulation, directive, treaty, policy, standard, Judgment,
agency requirement, license or permit of any Governmental Entity
(collectively, Laws), except for
violations that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect or prevent
or materially impair the consummation of the transactions
contemplated by this Agreement. The Company has not taken any
action which would cause it to be in material violation of the
Foreign Corrupt Practices Act of 1977, as amended, or any rules
and regulations thereunder. No investigation, audit or review by
any Governmental Entity with respect to the Company or any of
its Subsidiaries or any of their assets is pending or, to the
knowledge of the Company, threatened, nor has any Governmental
Entity notified the Company of its intention to conduct the
same, except for such investigations or reviews the outcome of
which are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect or prevent or
materially impair the consummation of the transactions
contemplated by this Agreement. As of the date hereof, to the
knowledge of the Company, the Company has not received any
notice or communication of any material noncompliance with any
applicable Laws that has not been cured as of the date of this
Agreement. The Company and its Subsidiaries each has obtained
and is in compliance with all permits, licenses, certifications,
approvals, registrations, consents, authorizations, franchises,
variances, exemptions and orders issued or granted by a
Governmental Entity necessary to conduct its business as
presently conducted and operate the Owned Real Properties (as
defined in Section 5.1(k)(i)), except those the absence of
which would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect or prevent or
materially impair the consummation of the transactions
contemplated by this Agreement.
(j) Material Contracts.
(i) Except for this Agreement and except for Contracts
filed as exhibits to the Company Reports, as of the date of this
Agreement, none of the Company or its Subsidiaries is a party to
or bound by:
(A) any Contract that would be required to be filed by the
Company as a material contract pursuant to
Item 601(b)(10) of
Regulation S-K
under the Securities Act;
(B) any Contract involving the payment or receipt of
amounts by the Company or any of its Subsidiaries of more than
$50 million in any calendar year;
(C) any Contract that contains a put, call or similar right
pursuant to which the Company or any of its Subsidiaries could
be required to purchase or sell, as applicable, any equity
interests of any Person or assets that have a fair market value
or purchase price of more than $50 million;
(D) any material agreement relating to the formation,
creation, operation, management or control of any Joint Venture;
A-15
(E) any Contract between the Company or any of its
Subsidiaries and any director or executive officer of the
Company or any Person beneficially owning five percent or more
of the outstanding Shares required to be disclosed pursuant to
Rule 404 of
Regulation S-K
under the Exchange Act;
(F) any Contract with any party with annual revenues of
$300 million or more pursuant to which the Company or any
of its Subsidiaries is a party containing a standstill or
similar agreement pursuant to which one party has agreed not to
acquire assets or securities of the other party or any of its
Affiliates; and
(G) any non-competition Contract or other Contract that
(1) limits or purports to limit in any material respect the
type of business in which the Company or its Subsidiaries may
engage, the type of goods or services which the Company or its
Subsidiaries may manufacture, produce, import, export, offer for
sale, sell or distribute or the manner or locations in which any
of them may so engage in any business or use their assets, or
(2) grants most favored nation status that
apply to the Company and its Subsidiaries, except in each of
clauses (1) and (2) as would not reasonably be
expected to materially impair the manner in which the Company
and its Subsidiaries operate the beer business as of the date
hereof;
Each such Contract described in clauses (A) through
(G) above and each such Contract that would be a Material
Contract but for the exception of being filed as an exhibit to
the Company Reports is referred to herein as a
Material Contract.
(ii) Each of the Material Contracts is valid and binding on
the Company or its Subsidiaries, as the case may be, and, to the
knowledge of the Company, each other party thereto, and is in
full force and effect, except for such failures to be valid and
binding or to be in full force and effect as would not, or would
not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect. There is no breach or default
under any Material Contracts by the Company or its Subsidiaries
and no event has occurred that with the lapse of time or the
giving of notice or both would constitute a breach or default
thereunder by the Company or its Subsidiaries, in each case
except as would not, or would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
(k) Properties.
(i) Except in any such case as is not, individually or in
the aggregate, reasonably likely to have a Material Adverse
Effect, with respect to the parcels of real property for the
Companys principal domestic facilities owned in fee by the
Company or any of its Subsidiaries, and all buildings,
structures, improvements, and fixtures thereon, together with
all rights of way, easements, privileges and appurtenances
pertaining or belonging thereto, including any right, title and
interest of the Company or any of its Subsidiaries in and to any
street or other property adjoining any portion of such property
(the Owned Real Property),
(A) the Company or one of its Subsidiaries, as applicable,
has good and marketable title to the Owned Real Property, free
and clear of any Encumbrance, (B) there are no outstanding
options or rights of first refusal to purchase the Owned Real
Property, or any portion of the Owned Real Property or interest
therein, and (C) the major structural elements of the
improvements comprising the Owned Real Property, including
mechanical, electrical, heating, ventilation, air conditioning
or plumbing systems, elevators or parking elements, are in
sufficiently good condition (except for ordinary wear and tear)
to allow the business of the Company and its Subsidiaries to be
operated in the ordinary course of business and consistent with
past practices of the Company as currently operated.
(ii) With respect to the real property with respect to
which the Companys principal domestic facilities are
leased, subleased or licensed to the Company or its Subsidiaries
(the Leased Real Property), the lease,
sublease or license for such property is valid, legally binding,
enforceable and in full force and effect, except in each case,
for such invalidity, failure to be binding or unenforceability
that is not, individually or in the aggregate, reasonably likely
to have a Material Adverse Effect.
(iii) Except in any such case as is not, individually or in
the aggregate, reasonably likely to have a Material Adverse
Effect, the Company and its Subsidiaries have good and
marketable title to, or a valid and binding leasehold interest
in, all their respective domestic properties and assets
(excluding Owned Real
A-16
Property, Leased Real Property and Intellectual Property (as
defined in Section 5.1(p))), in each case free and clear of
all Encumbrances.
(iv) For purposes of this Section 5.1(k) only,
Encumbrance means any Lien, mortgage,
easement, covenant, or other restriction or title matter or
encumbrance of any kind in respect of such asset but
specifically excludes (a) specified encumbrances described
in Section 5.1(k)(iv) of the Company Disclosure Schedule;
(b) encumbrances for current Taxes or other governmental
charges not yet due and payable; (c) mechanics,
carriers, workmens, repairmens or other like
encumbrances arising or incurred in the ordinary course of
business as to which there is no default on the part of the
Company or any of its Subsidiaries and reflected on or
specifically reserved against or otherwise disclosed in the
Companys consolidated balance sheets (and the notes
thereto) included in the Company Reports filed prior to the date
of this Agreement; and (d) other encumbrances that do not,
individually or in the aggregate, materially impair the
continued use, operation, value or marketability of the specific
parcel of Owned Real Property to which they relate or the
conduct of the business of the Company and its Subsidiaries as
presently conducted.
(l) Takeover Statutes. No
business combination, fair price,
moratorium, control share acquisition or
other similar anti-takeover statute or regulation (including
Section 203 of the DGCL) or any similar anti-takeover
provision in the Companys certificate of incorporation
(including Article EIGHTH ) or by-laws (each, a
Takeover Statute) is applicable to the
Company, the Shares, the Merger or the other transactions
contemplated by this Agreement. The Company and the board of
directors of the Company has taken all action so that
(i) Parent will not be an interested
stockholder or subject to restrictions or delays in
entering into or consummating a business combination
with the Company (in each case as such term is used in
Section 203 of the DGCL) as a result of the execution of
this Agreement or the consummation of the transactions in the
manner contemplated hereby, (ii) Parent will not be an
Interested Shareholder or subject to restrictions or
delays in entering into or consummating a Business
Transaction with the Company (in each case as such term is
used in the Companys certificate of incorporation) as a
result of the execution of this Agreement or the consummation of
the transactions in the manner contemplated hereby, and
(iii) Section 203 of the DGCL and Article EIGHTH
of the Companys certificate of incorporation is not
applicable to the Company, the Shares, the Merger or the other
transactions contemplated by this Agreement.
(m) Environmental Matters. Except
for such matters that, alone or in the aggregate, are not
reasonably likely to have a Material Adverse Effect:
(i) the Company and its Subsidiaries are in compliance, and
have complied at all times with, all applicable Environmental
Laws; (ii) no property currently or, to the knowledge of
the Company, formerly owned or operated by the Company or any of
its Subsidiaries has been contaminated with any Hazardous
Substance in a manner that could reasonably be expected to
require remediation or other action pursuant to any
Environmental Law; (iii) neither the Company nor any of its
Subsidiaries has received any written notice, demand, letter,
claim or request for information alleging that the Company or
any of its Subsidiaries is in violation of or liable under any
Environmental Law; and (iv) neither the Company nor any of
its Subsidiaries is subject to any order, decree or injunction
with any Governmental Entity or agreement with any third party
concerning liability under any Environmental Law or relating to
Hazardous Substances. As used herein, the term
Environmental Law means any federal,
state or local statute, Law, regulation, order, decree, permit
or authorization relating to: (A) the protection of health,
safety or the environment or (B) the handling, use,
transportation, disposal, release or threatened release of any
Hazardous Substance. This Section 5.1(m) constitutes the
only representations and warranties of the Company with respect
to any Environmental Law. As used herein, the term
Hazardous Substance means any
substance that is: (A) listed, classified, regulated under
any Environmental Law as hazardous substance, toxic substance,
pollutant, contaminant or oil or (B) any petroleum product
or by-product, asbestos-containing material, polychlorinated
biphenyls or radioactive material.
(n) Taxes. The Company and each of
its Subsidiaries (i) have prepared in good faith and duly
and, in cases where the statute of limitations would still be
open, timely filed (taking into account any extension of time
within which to file) all income, franchise, and similar Tax
Returns (as defined below) and all other material Tax Returns
required to be filed by any of them and all such filed Tax
Returns are complete and accurate in all material respects;
(ii) have paid all Taxes (as defined below) that are shown
as due on such filed Tax Returns and any Material Taxes that the
Company or any of its Subsidiaries are obligated to withhold
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from amounts owing to any employee, creditor or third party,
except with respect to matters contested in good faith; and
(iii) have not waived any statute of limitations with
respect to Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency which waiver or extension are
still in effect. As of the date of this Agreement, there are not
pending or, to the knowledge of the Company, threatened, any
audits, examinations, investigations or other proceedings in
respect of Taxes or Tax matters. There are not, to the knowledge
of the Company, any unresolved questions or claims concerning
the Companys or any of its Subsidiaries Tax
liability that are, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect and are not disclosed
or provided for in the Company Reports. The Company has made
available to Parent true and correct copies of the United States
federal income Tax Returns filed by the Company and its
Subsidiaries for each of the fiscal years ended
December 31, 2006, 2005 and 2004. Neither the Company nor
any of its Subsidiaries has engaged in any transaction that is
the same as, or substantially similar to, a transaction which is
a reportable transaction for purposes of Treasury
Regulations
Section 1.6011-4(b)
(including any transaction which the IRS has determined to be a
listed transaction for purposes of 1.6011-4(b)(2)).
Neither the Company nor any of Subsidiaries has engaged in a
transaction of which it made disclosure to any taxing authority
to avoid penalties under Section 6662(d) of the Code or any
comparable provision of state, foreign or local law. Neither the
Company nor any of its Subsidiaries has participated in any
tax amnesty or similar program offered by any taxing
authority to avoid the assessment of penalties or other
additions to Tax.
As used in this Agreement, (i) the term
Tax (including, with correlative
meaning, the term Taxes) includes all
federal, state, local and foreign income, profits, franchise,
gross receipts, environmental, customs duty, capital stock, net
worth, severances, stamp, payroll, sales, employment,
unemployment, disability, use, property, withholding, excise,
production, value added, goods and services, occupancy, transfer
and other taxes, duties or assessments of any nature whatsoever,
together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such
penalties and additions, and (ii) the term Tax
Return includes all returns and reports (including
elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority
relating to Taxes.
(o) Labor
Matters. Section 5.1(o) of the Company
Disclosure Schedules sets forth a list of all labor and
collective bargaining agreements, Contracts or other agreements
with a labor union, works council or labor organization to which
the Company or any of its Subsidiaries is party or by which any
of them are otherwise bound pertaining to certain Employees in
the United States (collectively, the Company Labor
Agreements). As of the date of this Agreement,
except as would not, or would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse
Effect, neither the Company nor any of its Significant
Subsidiaries is the subject of any proceeding that asserts that
the Company or any of its Subsidiaries has committed an unfair
labor practice (nor, to the knowledge of the Company, is there a
basis for any such claim), nor is there pending or, to the
knowledge of the Company, threatened, nor has there been, since
January 1, 2007, any labor strike, dispute, walk-out, work
stoppage, labor picketing, lockout or material slowdown
involving the Company or any of its Subsidiaries. Except as
would not, or would not reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect, the
consummation of the Merger and the other transactions
contemplated by this Agreement will not entitle any third party
(including any labor union or labor organization) to any
payments under any Company Labor Agreements. Except as would
not, or would not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect, the Company and
its Subsidiaries have complied in all respects with the
reporting requirements of the Labor Management Reporting and
Disclosure Act.
(p) Intellectual Property.
(i) Except in any such case as is not, individually or in
the aggregate, reasonably likely to have a Material Adverse
Effect, (A) the Company and its Subsidiaries own or have
sufficient rights to use all Intellectual Property that is used
in their respective businesses as currently conducted (the
Company IP) free and clear of all
liens and security interests, and will have the same rights
after the Closing Date; and (B) all of the registrations
and applications included in the Company IP owned by, and to the
knowledge of the Company, the Company IP exclusively licensed by
the Company and its Subsidiaries, are subsisting.
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(ii) Except in any such case as is not, individually or in
the aggregate, reasonably likely to have a Material Adverse
Effect, (A) neither the conduct of the business of the
Company
and/or the
conduct of the business of each of its Subsidiaries nor the
Company IP infringes, dilutes, misappropriates or otherwise
violates any Intellectual Property rights of any third party;
and (B) to the knowledge of the Company, no third party is
infringing, diluting, misappropriating or otherwise violating
any Company IP owned or exclusively licensed by the Company or
its Subsidiaries.
(iii) Except in any such case as is not, individually or in
the aggregate, reasonably likely to have a Material Adverse
Effect, the Company and its Subsidiaries take and have taken
commercially reasonable measures to maintain, preserve and
protect the confidentiality of all Trade Secrets, and to the
Companys knowledge, such Trade Secrets have not been used,
disclosed or discovered by any Person except pursuant to valid
and appropriate non-disclosure
and/or
license agreements or pursuant to obligations to maintain
confidentiality arising by operation of law.
(iv) Except in any such case as is not, individually or in
the aggregate, reasonably likely to have a Material Adverse
Effect, the Companys and its Subsidiaries computers,
Software, firmware, middleware, servers, systems, networks and
all other information technology equipment operate and perform
as required by the Company and each of its Subsidiaries in
connection with their respective businesses as currently
conducted and have not malfunctioned or failed within the past
three years, without such malfunction or failure having been
resolved.
For purposes of this Agreement: Intellectual
Property means all foreign, multinational and
domestic (A) trademarks, service marks, brand names,
corporate names, Internet domain names, logos, symbols, trade
dress, trade names, and all other source indicators and all
goodwill associated therewith and symbolized thereby;
(B) patents and proprietary inventions and discoveries;
(C) confidential and proprietary information, trade secrets
and know-how, (including confidential and proprietary processes,
technology, research, recipes, schematics, business methods,
formulae, drawings, prototypes, models, designs, customer lists
and supplier lists) (collectively, Trade
Secrets); (D) copyrights and works of
authorship in any media (including copyrights in software,
databases, source code, object code and all documentation
related thereto, Internet site content, advertising and
marketing materials and art work); (E) all other
intellectual property rights; and (F) all applications and
registrations, invention disclosures, and extensions, revisions,
restorations, substitutions, modifications, renewals, divisions,
continuations,
continuations-in-part,
reissues and re-examinations related to any of the foregoing;
Registered means issued by, filed
with, registered with, renewed by or the subject of a pending
application before any Governmental Entity or Internet domain
name registrar; and Software means any
and all (i) computer programs, including any and all
software implementations of algorithms, models and
methodologies, whether in source code or object code, and
(ii) databases and compilations, including any and all data
and collections of data, whether machine readable or otherwise.
(q) Brokers and Finders. Neither
the Company nor any of its officers, directors or employees has
employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection
with the Merger or the other transactions contemplated in this
Agreement, except that the Company has employed Goldman,
Sachs & Co., Citigroup Global Capital Markets Inc. and
Moelis & Company as its financial advisors. The
Company has made available to Parent a complete and accurate
copy of all agreements pursuant to which any advisor to the
Company is entitled to any fees and expenses in connection with
any of the transactions contemplated by this Agreement.
(r) Solvency. Immediately prior to
the Effective Time (and before giving effect to any financing
that is to be put in place in connection with the transactions
contemplated hereby), the Company is Solvent.
Solvent means, with respect to any
Person and a specified date of determination, that at such date:
(i) the present fair saleable value of such Persons
assets is in excess of the total amount of such Persons
probable liabilities on its existing debts and obligations
(including contingent liabilities) as they become absolute and
matured; (ii) such Person is able to pay its debts as they
become due; and (iii) such Person does not have
unreasonably small capital to carry on such Persons
business as theretofore operated and all businesses in which
such Person is then about to engage.
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(s) No Additional
Representations. Except for those
representations and warranties expressly set forth in this
Section 5.1 and except as otherwise expressly set forth in
this Agreement, neither the Company nor any other person acting
on behalf of the Company makes any representation or warranty of
any kind or nature, express or implied, in connection with the
transactions contemplated by this Agreement. Neither the Company
nor any of its Subsidiaries has made or makes any representation
or warranty with respect to any projections, estimates or
budgets made available to Merger Sub or its affiliates of future
revenues, future results of operations (or any component
thereof), future cash flows or future financial condition (or
any component thereof) of the Company and its Subsidiaries or
the future business and operations of the Company and its
Subsidiaries.
5.2. Representations and Warranties of Parent
and Merger Sub. Except as set forth in the
corresponding sections or subsections of the disclosure schedule
delivered to the Company by Parent prior to entering into this
Agreement (the Parent Disclosure
Schedule) (it being agreed that disclosure of any
item in any section or subsection of the Parent Disclosure
Schedule shall be deemed disclosure with respect to any other
section or subsection to which the relevance of such item is
reasonably apparent), Parent hereby represents and warrants to
the Company that:
(a) Organization, Good Standing and
Qualification. Each of Parent and Merger Sub
is a legal entity duly organized, validly existing and in good
standing under the Laws of its respective jurisdiction of
organization and has all requisite corporate or similar power
and authority to own, lease and operate its properties and
assets and to carry on its business as presently conducted and
is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership, leasing or
operation of its assets or properties or conduct of its business
requires such qualification, except where the failure to be so
organized, qualified or in such good standing, or to have such
power or authority, would not, individually or in the aggregate,
reasonably be expected to prevent or materially impair the
ability of Parent and Merger Sub to consummate the Merger and
the other transactions contemplated by this Agreement. Parent
has made available to the Company complete and correct copies of
Parents articles of incorporation and Merger Subs
certificate of incorporation and by-laws, each as amended to the
date of this Agreement, and each as so delivered is in full
force and effect. All of the capital stock of Merger Sub is
owned by InBev Worldwide S.à.r.l., a limited liability
company organized under the laws of Luxembourg and a wholly
owned subsidiary of Parent.
(b) Corporate Authority. No vote
of holders of capital stock of Merger Sub is necessary to
approve this Agreement and the Merger and the other transactions
contemplated hereby. Each of Parent and Merger Sub has all
requisite corporate power and authority and has taken all
corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement and to consummate
the Merger, subject only to approval of the Merger (in
accordance with Section 23 of Parents by-laws) and
certain other transactions contemplated by this Agreement, by
75% (or 50% with respect to certain of the other transactions)
of the outstanding ordinary shares of Parent (Parent
Common Stock) attending in person or being
represented by a proxyholder at a shareholders meeting of
Parent duly called and held for such purpose (the
Requisite Parent Vote) at which a
quorum is present. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub and is a valid and
binding agreement of Parent and Merger Sub, enforceable against
each of Parent and Merger Sub in accordance with its terms,
subject to the Bankruptcy and Equity Exception. At or prior to
the execution and delivery of this Agreement, Parent has
delivered to the Company a true and correct copy of the Parent
Shareholder Commitment.
(c) Governmental Filings; No Violations; Etc.
(i) Other than any filing with and approval of the Belgian
Banking, Finance and Insurance Commission
and/or
Euronext Brussels (or similar regulators or (market) authorities
in other jurisdictions) which may be required in conjunction
with the Parent Prospectus or the Equity Financing
(collectively, the Equity Financing
Filings), the filings
and/or
notices pursuant to Section 1.3, under the Exchange Act and
the HSR Act and any notices to, approvals of, or consents or
clearances by, any other Governmental Antitrust Entity (the
Parent Approvals), no notices, reports
or other
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filings are required to be made by Parent or Merger Sub with,
nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Parent or Merger Sub
from, any Governmental Entity in connection with the execution,
delivery and performance of this Agreement by Parent and Merger
Sub and the consummation by Parent and Merger Sub of the Merger
and the other transactions contemplated hereby, except those
that the failure to make or obtain are not, individually or in
the aggregate, reasonably likely to prevent or materially impair
the ability of Parent or Merger Sub to consummate the Merger and
the other transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this
Agreement by Parent and Merger Sub do not, and the consummation
by Parent and Merger Sub of the Merger and the other
transactions contemplated hereby will not, constitute or result
in (A) a breach or violation of, or a default under, the
articles of incorporation or by-laws of Parent or Merger Sub or
the comparable governing instruments of any of their respective
Subsidiaries, (B) with or without notice, lapse of time or
both, a material breach or violation of, assuming (solely with
respect to performance of this Agreement and consummation of the
Merger and the other transactions contemplated hereby)
compliance with the matters referred to in
Section 5.2(c)(i), any Law to which Parent or any of its
Subsidiaries is subject or (C) with or without notice,
lapse of time or both, a breach or violation of, a termination,
cancellation or modification (or right of termination,
cancellation or modification) or default under, the payment of
additional fees, the creation or acceleration of any obligations
under or the creation of a Lien on any of the assets of Parent
or any of its Subsidiaries pursuant to any Contract binding upon
Parent or any of its Subsidiaries, except in the case of
clause (C) for any such breach, violation, termination,
default, creation or acceleration that would not, individually
or in the aggregate, reasonably be likely to prevent or
materially impair the ability of Parent or Merger Sub to
consummate the Merger and the other transactions contemplated
hereby.
(d) Available Funds.
(i) Parent and Merger Sub have available or will have
available to them, as of the date all of the conditions to
Parents obligation to close pursuant to Section 7.1
and 7.2 have been satisfied (the Financing
Date), all funds necessary for the payment to the
Paying Agent of the aggregate amount of the Exchange Fund and
any other amounts required to be paid in connection with the
consummation of the Merger and the other transactions
contemplated by this Agreement and to pay all related fees and
expenses.
(ii) Parent has made available to the Company true and
complete copies of the following financing documents for the
Merger: (A) a true and correct copy of the $45,000,000,000
Senior Facilities Agreement dated 12th July 2008 (the
Senior Facilities Agreement) among
Parent and InBev Worldwide S.à.r.l., as Borrowers, and
Banco Santander, S.A., Barclays Capital, BNP Paribas, Deutsche
Bank AG, London Branch, Fortis Bank SA/NV, ING Bank N.V.,
J.P. Morgan Bank plc, Mizuho Corporate Bank, Ltd., The Bank
of Tokyo-Mitsubishi UFJ, Ltd., and The Royal Bank of Scotland
plc, as Mandated Lead Arrangers and Bookrunners, Fortis Bank
SA/NV, as Agent, and Fortis Bank SA/NV, as Issuing Bank, and the
other lenders from time to time party thereto (the
Senior Lenders), and (B) a true
and correct copy of the $5,600,000,000 Bridge Facility Agreement
dated
12th July
2008 (the Bridge Facility and,
together with the Senior Facilities Agreement, the
Facilities) among Parent and InBev
Worldwide S.à.r.l., as Borrowers, and Banco Santander,
S.A., BNP Paribas, Deutsche Bank AG, London Branch, Fortis Bank
SA/NV, ING Bank N.V., J.P. Morgan plc, and The Royal Bank
of Scotland plc, as Mandated Lead Arrangers and Bookrunners and
Fortis Bank SA/NV as Agent (the Bridge
Lenders and, together with the Senior Lenders, the
Lenders), and all annexes, schedules
and appendixes containing any funding conditions to the funding
under the Senior Facilities Agreement and the Bridge Facility,
pursuant to which Facilities the Lenders have agreed to lend the
amounts contemplated by the Facilities for the purpose of, among
other things, consummating the Merger and the other transactions
contemplated by this Agreement
(Financing). Each of the Facilities is
in full force and effect, and has not been withdrawn or
terminated and to Parents knowledge, is enforceable
against the Lenders in accordance
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with its terms, subject to the Bankruptcy and Equity Exception.
Parent will not release or consent to the termination of the
obligations of the Lenders under the Senior Facilities Agreement
or the Bridge Facility Agreement, except for assignments and
replacements of an individual Lender under the terms of or in
connection with the syndication of the Facilities. There are no
conditions precedent related to the funding under the
Facilities, except those expressly set forth in the Senior
Facilities Agreement or the Bridge Facilities Agreement. As of
the date of this Agreement, Parent has no reason to believe that
any of the conditions to the Facilities or the funding
thereunder will not be satisfied or that the Facilities and
Financing will not be made available to Parent as of the
Financing Date.
(iv) The net proceeds contemplated by the Facilities,
together with other existing financial commitments and resources
of Parent and Merger Sub and cash on hand of Parent and Merger
Sub at the Closing, will in the aggregate be sufficient for
Parent and Merger Sub to make all payments under
(i) Section 4.1(a) in respect of Shares,
(ii) Section 4.3(a) in respect of Company Options and
(iii) Section 4.3(b) in respect of Company Awards, and
any other amounts required to be paid in connection with the
consummation of the Merger and the other transactions
contemplated by this Agreement and to pay all related fees and
expenses.
(e) Capitalization of Merger
Sub. The authorized capital stock of Merger
Sub consists solely of 100 shares of common stock, par
value $0.01 per share, all of which are validly issued and
outstanding. All of the issued and outstanding capital stock of
Merger Sub is, and at the Effective Time will be, owned by
Parent or a direct or indirect wholly owned Subsidiary of
Parent. Merger Sub has not conducted any business prior to the
date of this Agreement and has no, and prior to the Effective
Time will have no, assets, liabilities or obligations of any
nature other than those incident to its formation and pursuant
to this Agreement and the Merger and the other transactions
contemplated by this Agreement.
(f) Litigation and
Judgments. There are no Actions pending or,
to the knowledge of Parent, threatened against Parent or any of
its Subsidiaries or Liabilities of Parent or its Subsidiaries,
except for those that are not, individually or in the aggregate,
reasonably likely to prevent or materially impair the
consummation of the transactions contemplated by this Agreement.
Neither Parent nor any of its Subsidiaries is a party to or
subject to the provisions of any Judgment of any Governmental
Entity which is, individually or in the aggregate, reasonably
likely to prevent or materially impair the consummation of the
transactions contemplated by this Agreement.
(g) Solvency. As of the Effective
Time, assuming (A) satisfaction of the conditions to
Parents and Merger Subs obligation to consummate the
Merger, or waiver of such conditions, (B) the accuracy in
all respects of the representations and warranties set forth in
Section 5.1 hereof without regard to any materiality
qualifiers (including Section 5.1(r)), (C) the
accuracy of any estimates, projections or forecasts provided by
the Company to Parent prior to the Effective Time and
(D) assuming that Parent was provided prior to the date
hereof all material information relating to any acceleration of
indebtedness of the Company and its Subsidiaries or other costs
associated with indebtedness of the Company and its
Subsidiaries, immediately after giving effect to the
transactions contemplated by this Agreement (including the
financing under the Facilities, the payment of the aggregate Per
Share Merger Consideration and the funding of any obligations of
the Surviving Corporation or its subsidiaries which become due
or payable by the Surviving Corporation or its subsidiaries in
connection with, or as a result of, the Merger, and the payment
of all related fees and expenses), the Surviving Corporation
will be Solvent.
(h) Share Ownership. As of the
date of this Agreement, Parent and Merger Sub do not
beneficially own, within the meaning of
Rule 13d-3
of the Exchange Act, more than 250 Shares.
(i) Brokers and Finders. Neither
Parent nor Merger Sub nor any of their respective officers,
directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or
finders fees in connection with the Merger or the other
transactions contemplated in this Agreement, except that Parent
has employed Lazard Frères SAS, J.P. Morgan plc,
Deutsche Bank AG and BNP PARIBAS as its financial advisors.
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(j) No Additional
Representations. Except for those
representations and warranties expressly set forth in this
Section 5.2 and except as otherwise expressly set forth in
this Agreement, none of Parent, Merger Sub or any other person
acting on behalf of Parent or Merger Sub makes any
representation or warranty of any kind or nature, express or
implied, in connection with the transactions contemplated by
this Agreement.
ARTICLE VI
Covenants
6.1. Interim Operations.
(a) Except as required by applicable Law or as expressly
contemplated by this Agreement, the Company covenants and agrees
as to itself and its Subsidiaries that, after the date of this
Agreement and prior to the Effective Time, the business of it
and its Subsidiaries shall be conducted in all material respects
in the ordinary and usual course and, to the extent consistent
therewith, it and its Subsidiaries shall use their respective
commercially reasonable efforts to preserve their business
organizations intact and maintain existing relations and
goodwill with Governmental Entities, customers, suppliers,
licensors, licensees, distributors, creditors, lessors,
employees and business associates (other than as announced by
the Company prior to the date hereof). Without limiting the
generality of, and in furtherance of, the foregoing, from the
date of this Agreement until the Effective Time, except
(A) as otherwise expressly required or permitted by this
Agreement or as required by Law, (B) as Parent may approve
in writing (such approval not to be unreasonably withheld or
delayed) or (C) as set forth in Section 6.1 of the
Company Disclosure Schedule, the Company will not and will not
permit its Subsidiaries to:
(i) adopt or propose any change in its certificate of
incorporation or by-laws or other applicable governing
instruments;
(ii) merge or consolidate the Company or any of its
Subsidiaries with any other Person, except for any such
transactions among wholly owned Subsidiaries of the Company, or
other than in the ordinary course restructure, reorganize or
completely or partially liquidate or otherwise enter into any
Contracts imposing material changes or restrictions on its
assets, operations or businesses, other than in the ordinary
course;
(iii) acquire, directly or indirectly, whether by purchase,
merger, consolidation or acquisition of stock or assets or
otherwise, any assets, securities, properties, interests, or
businesses or make any investment (whether by purchase of stock
or securities, contributions to capital, loans to, or property
transfers), in each case, other than (A) in the ordinary
course of business (it being understood and agreed that the
acquisition of all or substantially all of the assets of any
Person is not in the ordinary course of business), or
(B) if not in the ordinary course of business, with a value
or purchase price (including the value of assumed liabilities)
not in excess of $50 million in any transaction or related
series of transactions or acquisitions pursuant to Contracts in
effect as of the date of this Agreement and listed on
Section 6.1 of the Company Disclosure Schedule (it being
understood