InBev upped the pressure on reluctant bid target Anheuser-Busch on Monday with a plan to replace the U.S. rival's board of directors that has rejected its $46.3 billion takeover offer.
Belgium-based InBev filed a preliminary consent solicitation statement with the United States Securities and Exchange Commission that would lead to Anheuser shareholders voting on the board's future.
InBev, The world's second-largest brewer by volume, said it wanted to give shareholders a voice in its proposed takeover of the Budweiser and Michelob brewer in the face of the board's unwillingness to talk.
InBev, maker of Stella Artois, Beck's and Brahma, said it would ask Anheuser's board to set a "record date." InBev's bid to replace the board would succeed if a majority of holders of shares on that date later voted in favour of its plan.
Anheuser would have 10 days to set a date in the subsequent 10 days following InBev's request, InBev said.
InBev would have to submit to Anheuser written consents from shareholders within 60 days of the earliest dated consent.
The Belgian company also announced its own proposed board, including Adolphus Busch IV, an uncle of the current chief executive of Anheuser, and current and former executives of U.S. corporations.
It was also asking Anheuser shareholders to repeal any change to Anheuser's bylaws that might be made after June 26.
The SEC filing follows InBev's legal action launched last month at the Delaware Chancery Court in which it sought clarification that Anheuser shareholders could remove all 13 board members without cause.
"InBev is increasing the pressure with this move," said Kris Kippers, analyst at Petercam. "It has also referred to the current weak market conditions. I think the chances are less that it will increase its offer."
He said the approach to shareholders would take some time, a line echoed by KBC Securities analyst Wim Hoste.
"We believe InBev's move slows down a bit the pace of the takeover project," Hoste said, adding he believed InBev would succeed in acquiring Anheuser.
InBev stock was down 0.7 percent at 41.15 euros at 1125 GMT, compared with the DJ Stoxx European food and beverage index's 0.3 percent drop.
Alternative "Independent" Board
Analysts agreed that InBev had at least sounded out the alternative "independent" board members it was proposing to ensure that they were at least willing to consider a bid.
But Dresdner Kleinwort's Andrew Holland said he did not believe they would necessarily accept the $65 per share offer.
"I cannot see they would accept having their hands tied... They would have a fiduciary duty towards Anheuser shareholders," he said. "I would be surprised if InBev's opening shot were to be its final shot."
InBev repeated that it still preferred to discuss a friendly takeover to create the world's largest brewer with the current Anheuser board.
While the latest move did not amount to the launch of a hostile offer, analysts believed the board was likely to see it as a hostile manoeuvre in any increasingly acrimonious battle.
Some U.S. lawmakers, including both senators from Missouri, where Anheuser is based, have already expressed objections to the deal, arguing it could lead to job losses there.
The head of the Teamsters' brewery and soft drink workers conference has said he would prefer Anheuser to stay American.
InBev's next approach might be to gauge the appetite of major shareholders, chief among them Warren Buffett, whose Berkshire Hathaway is Anheuser's second-largest shareholder with a roughly 5 percent stake.
He has so far called the battle "an interesting spectator sport," but has not thrown his support behind either side.
Anheuser-Busch's response has been to set out its own plan to cut $1 billion in costs and improve earnings and to tell investors that it can create much more value that $65 per share.
InBev argues that the figure reflects the full and fair value of the U.S. company.
"The proposal is backed by fully committed financing and provides immediate certainty of value in a weakened stock market environment," Chief Executive Carlos Brito said in Monday's InBev statement.
By contrast, Anheuser's plan entailed "significant execution risks," Brito added, and did not address the challenges the company faced in an increasingly globalised industry.