Busch Family's Bias Bars $46B Beer Brewer Merger, Lawsuits Say

Anheuser-Busch Cos. investors say in several recent lawsuits that the founding family's unreasonable "This Bud is not for you" stance has selfishly impeded a heady $46 billion takeover offer from Euro brewing giant InBev.

Two pension funds and an individual shareholder have filed similar suits asking the Delaware Chancery Court to force the Anheuser-Busch board and management to drop the "scorched earth" tactics they allegedly are using to fend off Belgium-based beverage conglomerate InBev SA/NV.

One of the pension funds, the Detroit General Retirement System, claims that even though InBev's offer of $65 per share represents a handsome 25 percent premium over the current stock price for the nation's largest brewer, shareholders have no chance to accept it because the Busch family has refused to even talk to the suitor.

Anheuser-Busch products, including the popular Bud and Bud Light brands, account for nearly half the country's beer sales.

The company also owns 10 theme parks through a subsidiary, but the shareholder plaintiffs say Anheuser-Busch's recent revenue growth has been "flat."

Although previous press reports quoted CEO August Busch IV as warning would-be acquirers that "This Bud is not for you," the company has said it cannot comment on the InBev merger offer until the board considers its options.

In a statement Anheuser-Busch CFO W. Randolph Baker said the company's inability to comment "should not be interpreted as support for or opposition to the proposal."

The shareholders filed the breach-of-duty suits in Delaware because the company is incorporated there although its headquarters are in St. Louis.

All three suits are derivative, meaning that they are brought in the name of the company and that any money recovered from the individual defendants will go back into the corporate coffers.

The suits claim that even though the Busch family currently owns only about 4 percent of the company, it has controlled the business for nearly its entire 150-year life by doling out lucrative distributorships and other contracts to directors.

August Busch III is the chairman of the board.

The Detroit pension fund's complaint says that while staying officially mum, the Anheuser-Busch board and management immediately reacted to the InBev offer by implementing a plan to make the company unpalatable by loading it up with debt.

The suit claims the Busch family plans to spend up to $15 billion to acquire the remaining shares of Grupo Modelo, a Mexican brewing giant in which Anheuser-Busch already has a 50 percent share.

When a merger offer for the company has been made, the directors have a fiduciary duty to the shareholders to try to get the best price for the company's stock, but the Anheuser-Busch directors are putting their own interests and their loyalty to the Busch family first, the suits say.

The plaintiffs have asked the court to issue an injunction barring the board from using self-serving defensive measures and compel the officers and directors to negotiate with all possible buyers, including InBev.

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The Detroit pension fund is represented by Stuart Grant, Michael Barry and John Kairis of Grant & Eisenhofer in Wilmington, Del., and Gerald Silk, Salvatore Graziano and Mark Lebovitch of Bernstein Litowitz Berger & Grossmann in New York.The other pension fund plaintiff, Insulators & Asbestos Workers Local No. 14, is represented by Jessica Zeldin of Rosenthal Monhait & Goddess in Wilmington.Individual shareholder Michael Golombuski is represented by Seth Rigrodsky of Rigrodsky & Long in Wilmington.