AB InBev's CEO Brito Runs Afoul of U.K. Takeover Rules

By Shayndi Raice 

LONDON--The U.K. takeover rules are tripping up yet another foreign company in the heat of battle.

On Wednesday, Carlos Brito, the chief executive of Anheuser-Busch InBev NV, ran afoul of the U.K. Takeover Code by saying that he expected to have the support of SABMiller PLC's second-largest shareholder. AB InBev, which is pursuing a nearly $100 billion deal to buy its biggest rival, put out a statement clarifying that it didn't currently have the support of BevCo Ltd., the investment vehicle run by the Santo Domingo family that owns 14% of SABMiller.

Mr. Brito isn't alone in such a misstep. Mergers and acquisitions in the U.K. are governed by an independent body known as the Takeover Panel, whose rule book can be hard for foreigners to navigate.

Last year, U.S. drug maker AbbVie Inc. put out a clarification statement after its chief executive said in a newspaper interview that shareholders were generally supportive of its bid for U.K.-listed, Dublin-based rival Shire PLC.

Lawyers say U.S. companies often underestimate the weight the panel gives to all public communications. One of the panel's primary missions is to ensure that all shareholders receive accurate information and have equal access to such information.

"The way the panel looks at that issue, and indeed all public statements, is from a market perspective," said Selina Sagayam, a London-based partner with the law firm Gibson Dunn & Crutcher LLP. "Has the market been misled?"

In both cases, AbbVie and AB InBev implied without explicit proof that they had shareholder support for their proposals, potentially causing confusion to the market.

Because of its sensitivity to misinformation moving markets, the panel requires bidders to uphold any public statements they make. For example, when U.S. pharmaceutical giant Pfizer Inc. went after U.K. rival AstraZeneca PLC, it said nearly a week before a bidding deadline that it was submitting its final offer. By calling it a final offer, Pfizer was blocking the possibility of later raising its bid. Similarly, what was then Kraft Foods Inc. got into hot water when it closed a Cadbury PLC plant it had said during its takeover bid would remain open.

Pfizer didn't immediately respond to a request for comment.

For the panel, a statement to the market means "the toothpaste is out of the tube," Ms. Sagayam said. The panel will hold bidders to account because "there were investors or shareholders who made an investment decision based on those statements."

Write to Shayndi Raice at [e-mail]

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October 09, 2015 14:53 ET (18:53 GMT)

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