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How ethical is InBev’s push to oust Anheuser-Busch’s board?
By Lauren | July 7, 2008
Belgian brewing company InBev, Inc. must have been mightily disappointed when the Anheuser-Busch Board of Directors of Anheuser-Busch rejected InBev’s offer to buy the American brewer, theme parks, Clydesdales, Super Bowl ads and all. The Anheuser-Busch board declined the offer on the grounds that it undervalued the company. Apparently, InBev refuses to take “no” for an answer.
First, InBev filed suit to confirm that Anheuser-Busch’s shareholders have the legal right to remove all of the members of Anheuser-Busch’s current board. InBev then announced its intent to file a preliminary consent solicitation with the Securities and Exchange Commission sometime today, giving Anheuser-Busch’s current board members a mere ten days to respond before the shareholders get the opportunity to replace them with an alternate board that InBev very thoughtfully recruited. InBev claims that the new board, if selected by a majority of Anheuser-Busch shareholders, will “take an independent view on the proposed combination.”
Oh, really?
InBev has disclosed that it will pay each of the alternate board nominees $50,000 and 10 shares of common stock. That’s not a princely sum by Wall Street standards, but I have to question how “independent” any board member who’s been recruited and compensated by InBev can possibly be. Even if the nominees’ intentions are good (and they probably are), I doubt very much whether InBev would choose anyone for the alternate board who wasn’t already strongly committed to having the buy-out go forward.
Maybe the current Anheuser-Busch board is overly optimistic about the value of its company, or maybe the current board is fulfilling its fudiciary responsibility to protect Anheuser-Busch’s shareholders from the temptation of quick money offered in a low-ball takeover bid. Either way, I’d be a lot more comfortable with the ethical ramifications of this corporate maneuvering if the push to replace Anheuser-Busch’s board was coming from the shareholders themselves, and not from a would-be purchaser who may or may not have Anheuser-Busch’s best interests at heart. In my opinion, a truly independent board would be in a much better position to evaluate InBev’s offer than InBev’s nominees would be.
Topics: Business Ethics, Corporate Governance, ethics |
July 8th, 2008 at 10:57 pm
Lauren,
I don’t know whether or not InBev has a substantial shareholding in Anheuser-Busch.
If so, I feel that it does have a right to attempt to use its shareholding to its own advantage to some degree, provided it does so in a manner which is reasonably fair to other shareholders.
However, I do not see how any board which has been hand-picked by InBev could possibly evaluate the proposed transaction in an independent manner. Shareholders of Anheuser-Busch would be wise to reject InBev’s proposed changes to the board unless the current directors could be shown to have been extremely negligent in the course of their duties.
Bottom line - shareholders need a truly independent board, not one hand picked by a predator, to advise them of the most appropriate action.
Cheers
Andrew
December 9th, 2008 at 1:13 am
Belgian beer maker InBev said Tuesday it has completed its $52 billion purchase of Anheuser-Busch Companies Inc. , creating the world’s largest brewer. Shareholders of Anheuser-Busch approved the deal Wednesday,