UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Amendment No. 2

to

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:

 

þ  Preliminary Proxy Statement

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

o  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):

 

 

 

 

 

 

 

 

 

 

 

 

Preliminary Proxy Statement — Subject to Completion, dated October 2, 2008

 

Anheuser-Busch Companies, Inc.
One Busch Place
St. Louis, Missouri 63118

 

, 2008

 

Dear Fellow Stockholder:

 

You are cordially invited to attend a special meeting of stockholders of Anheuser-Busch Companies, Inc. to be held on       , 2008 at      at      local 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 InBev’s 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,

 

 

The proxy statement is dated     , 2008, and is first being mailed to stockholders on or about     , 2008.

 

Preliminary Proxy Statement — Subject to Completion, dated October 2, 2008

 

Anheuser-Busch Companies, Inc.
One Busch Place
St. Louis, Missouri 63118

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held On          , 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          , 2008,      at      at local 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-Busch’s 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-Busch’s 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-Busch’s 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

          , 2008

 

TABLE OF CONTENTS

 

 

SUMMARY TERM SHEET

 

The Parties to the Merger (Page 16)

 

The Merger (Page 20)

 

Effects of the Merger (Page 58)

 

Treatment of Options and Other Awards (Page 59)

 

The Special Meeting (Page 17)

	•	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;
	•	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);
	•	by submitting a later-dated proxy card;
	•	if you voted by telephone or the Internet, by voting a second time by telephone or Internet; or
	•	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.

 

Recommendation of Our Board of Directors (Page 25)

 

Interests of Anheuser-Busch’s Directors and Executive Officers in the Merger (Page 44)

 

Opinion of Goldman, Sachs & Co. (Page 30)

 

Opinion of Citigroup Global Markets Inc. (Page 37)

 

Financing (Page 43)

	•	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.

 

Regulatory Approvals (Page 53)

 

Material United States Federal Income Tax Consequences (Page 52)

 

Conditions to the Merger (Page 68)

	•	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

		InBev present in person or by proxy at an extraordinary shareholders’ meeting of InBev (certain of InBev’s shareholders have committed to vote in favor of the Merger; see “Voting Agreement of Stichting InBev AK” on page 7 below). InBev shareholders approved the acquisition of Anheuser-Busch by InBev at InBev’s extraordinary shareholders’ meeting on September 29, 2008.

	•	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
	•	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.

	•	our representations and warranties must be true and correct, subject to certain materiality thresholds;
	•	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;
	•	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
	•	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.

	•	the representations and warranties made by InBev and Merger Sub must be true and correct, subject to certain materiality thresholds;
	•	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
	•	InBev must deliver to us at closing a certificate with respect to the satisfaction of the foregoing conditions relating to representations, warranties and obligations.

 

Post-Closing Agreements of InBev (Page 66)

	•	Anheuser-Busch’s current headquarters in St. Louis, Missouri will be the surviving corporation’s headquarters, InBev’s headquarters for North America (excluding Cuba) and the global home of the flagship “Budweiser” brand;
	•	InBev’s name will be “Anheuser-Busch InBev N.V./S.A.”;
	•	InBev, after consultation with Anheuser-Busch’s 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 InBev’s next annual general meeting of shareholders;
	•	InBev will preserve Anheuser-Busch’s heritage and continue to support philanthropic and charitable causes in St. Louis and other communities in which Anheuser-Busch operates, including Grant’s Farm and the Clydesdales operations; and
	•	Anheuser-Busch will honor its obligations relating to Busch Stadium.

 

Voting Agreement of Stichting InBev AK (Page 73)

 

No Solicitation of Other Offers (Page 66)

 

Restrictions on Recommendation Withdrawal (Page 67)

 

Termination of the Merger Agreement (Page 69)

	•	by mutual written consent of Anheuser-Busch and InBev;
	•	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:

	•	the Merger is not completed on or before March 19, 2009 (the “Termination Date”);
	•	our stockholders do not adopt the Merger Agreement at the special meeting or any adjournment or postponement thereof;

	•	a resolution approving the Merger shall not have been obtained at InBev’s extraordinary shareholders’ meeting (however, InBev shareholders approved the acquisition of Anheuser-Busch by InBev at InBev’s extraordinary shareholders’ meeting on September 29, 2008); or

	•	there is any final and non-appealable action that permanently restrains, enjoins or otherwise prohibits the Merger.

	•	by Anheuser-Busch, if:

	•	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;
	•	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
	•	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.

	•	by InBev, if:

	•	our board of directors withholds, withdraws, qualifies or modifies its recommendation that our stockholders adopt the Merger Agreement;
	•	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;
	•	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
	•	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.

 

Termination Fee (Page 70)

	•	we terminate the Merger Agreement in order to enter into an agreement with respect to a superior proposal;
	•	InBev exercises its right to terminate the Merger Agreement in certain circumstances involving a withdrawal, qualification or modification of, or failure to reaffirm, our board’s recommendation of the Merger, or an uncured breach of the Merger Agreement; or
	•	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,

		approve or consummate, a transaction contemplated by any third party acquisition proposal within 12 months of the termination of the Merger Agreement.

 

Specific Performance (Page 71)

 

Appraisal Rights (Page 78)

 

Market Price of Common Stock (Page 75)

 

Fees and Expenses (Page 73)

 

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.

 

 

 

 

 

 

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.

 

 

 

 

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.

 

 

 

 

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.

 

 

 

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:

 

 

 

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 nation’s 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., Mexico’s 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 Beck’s^®, 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.

 

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          , 2008, starting at      local time, at           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          , 2008.

 

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           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.

 

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 are 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.

 

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 participant’s shares of common stock according to the participant’s instructions (subject to the trustee’s 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 participant’s 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’s investment committee 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:

 

 

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          , local 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.

 

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.

 

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 firm’s proxy soliciting services on our behalf.

 

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.

 

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 InBev’s 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 InBev’s ability to finance a possible acquisition of Anheuser-Busch and the financial aspects of InBev’s 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-Busch’s management reported to the board that it was in the process of undertaking its annual update of Anheuser-Busch’s five-year strategic plan, including cost reduction projections, and indicated that this process was proceeding on a time frame consistent with the prior year’s 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 InBev’s non-binding proposal to acquire Anheuser-Busch for $65.00 per share in cash. The letter stated that InBev’s proposal was conditioned on InBev’s completion of due diligence and the negotiation of definitive transaction agreements. No financing commitments were provided with the letter. Following receipt of InBev’s proposal, Anheuser-Busch issued a press release acknowledging receipt of InBev’s proposal and informing Anheuser-Busch’s 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.

On June 13, 2008, a meeting of the board was convened in order to update the board on InBev’s proposal. Representatives of Skadden, Arps reviewed with the directors their fiduciary duties in analyzing InBev’s 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 InBev’s proposal set forth in InBev’s June 11th letter. The letter indicated that InBev’s 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 InBev’s proposal could have on the ability of Anheuser-Busch’s stockholders to receive the consideration contemplated by InBev’s proposal.

 

On June 16, 2008, Anheuser-Busch issued a press release and sent a response to InBev stating that the board: (i) was evaluating InBev’s proposal carefully and in the context of all relevant factors, including Anheuser-Busch’s long-term strategic plan; (ii) would pursue the course of action that was in the best interests of Anheuser-Busch’s 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. Fernandez’s resignation did not impact the board’s consideration of strategic alternatives, including its consideration of InBev’s proposal and a possible strategic transaction with the third party.

 

On June 20, 2008, Anheuser-Busch’s board met to consider and discuss InBev’s proposal and Anheuser-Busch’s strategic alternatives. At this meeting, Anheuser-Busch’s management made a presentation to the board regarding Anheuser-Busch’s updated five-year strategic plan, which included anticipated pricing increases and plans to accelerate Anheuser-Busch’s “Blue Ocean” cost savings program, which management estimated would achieve cumulative annual cost savings of approximately $1 billion by 2010. Anheuser-Busch’s management also discussed with the board the potential benefits and risks associated with the new plan as well as Anheuser-Busch’s strategic alternatives. Additionally, representatives of each of Anheuser-Busch’s principal financial advisors, Goldman Sachs and Citi, reviewed with the board financial considerations relating to InBev’s proposal (including InBev’s ability to obtain financing) and Anheuser-Busch’s strategic alternatives, including Anheuser-Busch’s 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-Busch’s 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-Busch’s board and issued a press release stating that InBev had obtained financing commitments for the transaction contemplated by InBev’s 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 InBev’s proposal was a “firm proposal” subject to negotiation of definitive documentation and InBev’s completion of due diligence.

 

Also on June 25, 2008, Anheuser-Busch’s board met to continue its consideration of InBev’s proposal. At this meeting, Anheuser-Busch’s management made presentations to the board regarding InBev’s proposal and Anheuser-Busch’s strategic alternatives, including Anheuser-Busch’s 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 InBev’s $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 InBev’s proposal with the board and made a presentation to the directors describing their fiduciary duties in considering InBev’s proposal and other possible Anheuser-Busch strategic alternatives. At the end of this meeting, Anheuser-Busch’s 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-Busch’s bylaws regarding the determination of a record date for any stockholder action by written consent. Following the

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-Busch’s Restated Certificate of Incorporation and Delaware law.

 

Also on June 26, 2008, Anheuser-Busch’s board met to further consider InBev’s $65.00 per share proposal and to discuss the status of Anheuser-Busch’s ongoing discussions with the third party. At this meeting, representatives of Goldman Sachs and Citi again reviewed with the board the financial aspects of InBev’s $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 InBev’s proposal as inadequate and not in the best interests of Anheuser-Busch’s stockholders and (ii) adopt the proposed amendment to Anheuser-Busch’s 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 day’s 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 InBev’s proposal was inadequate and not in the best interests of Anheuser-Busch’s 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 board’s 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-Busch’s 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 InBev’s belief that its proposal provided immediate certainty to Anheuser-Busch’s stockholders.

 

Also on July 1, 2008, the board met to further consider Anheuser-Busch’s 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 InBev’s 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 InBev’s proposal. Following discussions among the entire board, Anheuser-Busch’s 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-Busch’s 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-Busch’s strategic alternatives, including its ongoing discussions with the third party. At the meeting, Anheuser-Busch’s management made a presentation with respect to a potential transaction with the third party and the strategic and financial implications of such a

transaction. Representatives of Skadden, Arps also made presentations to the board regarding the status of Anheuser-Busch’s 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-Busch’s 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 InBev’s 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-Busch’s board remained open to considering any proposal that offered full and certain value to Anheuser-Busch’s 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 board’s 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., InBev’s financial advisors, met to further discuss a possible transaction. At this meeting, representatives of Goldman Sachs stated that InBev’s 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 InBev’s consent solicitation pursuant to the terms of Anheuser-Busch’s bylaws and (2) a letter to Anheuser-Busch seeking a list of Anheuser-Busch’s stockholders and other materials.

 

On July 9, 2008, Anheuser-Busch filed a preliminary consent revocation statement in response to InBev’s 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, InBev’s best and final proposal. InBev’s 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 InBev’s revised proposal, including the proposed price and other terms, the board authorized Anheuser-Busch’s management, Goldman Sachs and Skadden, Arps to continue to explore whether a mutually acceptable transaction could be reached on the terms

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 InBev’s financing.

 

On July 10, 2008, Anheuser-Busch and InBev entered into a confidentiality agreement and thereafter, until July 13, 2008, InBev’s representatives conducted a confirmatory due diligence review of Anheuser-Busch’s business. Additionally, during an initial meeting between representatives of Anheuser-Busch and InBev on July 10, 2008, InBev’s 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 InBev’s out-of-pocket expenses and full reimbursement of InBev’s financing expenses. Representatives of Skadden, Arps also requested on behalf of Anheuser-Busch that InBev seek to obtain a voting agreement from InBev’s 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 InBev’s outstanding common stock) to vote at an extraordinary shareholders’ meeting of InBev in favor of, among other things, InBev’s 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-Busch’s “Blue Ocean” plan, its pricing initiatives and the financial community’s reaction to the updated strategic plan. The directors discussed with Anheuser-Busch’s 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-Busch’s 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-Busch’s non-management directors and outside directors each engaged in further discussions in executive session, without the other directors or management present, and directed

questions to representatives of Skadden, Arps and Simpson Thacher, as well as to Anheuser-Busch’s 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-Busch’s previous request for InBev’s best and final proposal, (ii) statements from senior representatives of InBev, including representatives of InBev’s controlling shareholders, that the $70.00 per share was InBev’s best and final proposal and (iii) the board’s 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-Busch’s negotiating position if the request was rejected, result in the withdrawal of InBev’s 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.

 

Our board of directors, acting with the advice and assistance of its financial advisors and outside legal counsel and Anheuser-Busch’s 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-Busch’s 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:

 

 

 

 

 

 

Our board of directors also considered potential risks or negative factors relating to the Merger, including the following:

 

 

 

 

Our board of directors concluded that the potentially negative factors associated with the proposed Merger were outweighed by the opportunity for Anheuser-Busch’s 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

future prospects of Anheuser-Busch, including the potential execution risks associated with Anheuser-Busch’s “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-Busch’s 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.

 

Goldman Sachs rendered its opinion to Anheuser-Busch’s 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-Busch’s 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:

 

 

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

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:

 

 

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:

 

 

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-Busch’s 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 company’s 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-Busch’s meaningful equity investments in Modelo

and Tsingtao and other enterprises, which are not accounted for in Anheuser-Busch’s reported operating income, as described below.

 

In the first alternative, Goldman Sachs subtracted from Anheuser-Busch’s 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-Busch’s implied economic ownership percentage of the fully diluted market capitalizations of Modelo and Tsingtao and the book value of Anheuser-Busch’s 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.

 

 

In the second alternative, Goldman Sachs adjusted Anheuser-Busch’s enterprise value by adding a proportionate amount (representing Anheuser-Busch’s implied economic ownership percentage) of the debt and subtracting a proportionate amount (representing Anheuser-Busch’s implied economic ownership percentage) of the cash of Modelo and Tsingtao and by subtracting the book value of Anheuser-Busch’s other equity investments, resulting in an adjusted enterprise value of $59,980 million. It also adjusted Anheuser-Busch’s EBITDA by adding to it Anheuser-Busch’s proportionate share of Modelo’s and Tsingtao’s EBITDA for the period in question.

 

 

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-Busch’s EBITDA, which resulted in the enterprise value/EBITDA multiples set forth below:

 

 

These calculations were used to illustrate the enterprise value/EBITDA multiple when Anheuser-Busch’s economic interest in its non-consolidated equity investments is not taken into account.

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:

 

 

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-Busch’s common stock, which is designed to provide an indication of the present value of a theoretical future value of a company’s equity as a function of such company’s 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-Busch’s projected earnings per share of Anheuser-Busch common stock set forth in Anheuser-Busch’s 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-Busch’s “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-Busch’s management projections in the A-B Plan and valuing Anheuser-Busch’s 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, (b) using the Business Sensitivity Case and valuing Anheuser-Busch’s 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-Busch’s 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-Busch’s percentage equity stake (despite that Anheuser-Busch only receives dividends from Modelo), and valuing Tsingtao at the implied market value of Anheuser-Busch’s 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-Busch’s percentage equity stake was also added). The implied discounted free cash flow value of Modelo was calculated using the methodologies used to calculate Anheuser-Busch’s 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:

 

 

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-Busch’s 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

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-Busch’s 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-Busch’s 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-Busch’s $300,000,000 5.60% Notes due 2017 in February 2007; as co-manager with respect to a public offering of Anheuser-Busch’s $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 InBev’s €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

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.

 

 

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-Busch’s 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 Citi’s 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. Citi’s opinion was provided to Anheuser-Busch’s board of directors in connection with its evaluation of the merger consideration from a financial point of view. Citi’s 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:

 

 

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-Busch’s 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

discussed with Citi, Citi was advised by Anheuser-Busch’s management that such forecasts and other information and data were reasonably prepared on bases reflecting the best currently available estimates and judgments of Anheuser-Busch’s management as to Anheuser-Busch’s future financial performance. Citi assumed, with Anheuser-Busch’s 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. Citi’s opinion does not address Anheuser-Busch’s 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. Citi’s 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 Citi’s 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 Citi’s 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, Citi’s 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-Busch’s board of directors. Citi’s opinion was only one of many factors considered by Anheuser-Busch’s board of directors in its evaluation of the Merger and should not be viewed as determinative of the views of Anheuser-Busch’s 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-Busch’s board of directors in connection with Citi’s opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand Citi’s financial analyses, the tables

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 Citi’s financial analyses.

 

Stock Trading History and Implied Premiums

 

Citi considered the merger consideration of $70.00 per share offered to holders of Anheuser-Busch’s common stock in the Merger and calculated the implied premiums represented relative to the closing price of Anheuser-Busch’s 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 InBev’s $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:

 

 

Citi also calculated the implied premiums paid in all-cash transactions valued above $10 billion since January 1, 2003, based on the target company’s 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-Busch’s 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:

 

 

 

 

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-Busch’s last twelve months EBITDA. Financial data for the selected precedent

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-Busch’s managements. This analysis indicated the following per share equity reference range for Anheuser-Busch, as compared to the per share merger consideration:

 

 

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-Busch’s common stock:

 

 

 

 

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:

 

 

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:

 

 

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

internal estimates of Anheuser-Busch’s management. Based on the comparable company metrics analyzed, Citi selected a multiple range of 7.5x to 9.5x to the ratio of Anheuser-Busch’s firm value to its EBITDA for the calendar year 2009 and 13.5x to 16.5x to Anheuser-Busch’s estimated Earning Per Share for calendar year 2009. This analysis indicated the following selected per share equity reference range for Anheuser-Busch’s common stock, as compared to the merger consideration of $70.00 per share:

 

 

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-Busch’s management as summarized on page 43. Citi also evaluated management’s internal estimates after applying certain sensitivities to take into account the possibility that (i) only seventy-five percent of the cost-savings associated with management’s 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 management’s 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-Busch’s business units, resulting in a consolidated range of 1.6% to 2.2% to Anheuser-Busch’s 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-Busch’s common stock, as compared to the per share merger consideration of $70.00 per share:

 

 

Miscellaneous

 

Under the terms of Citi’s 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 Citi’s 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-Busch’s $500,000,000 5.50% Notes due 2018 in November 2007, co-manager with respect to the offering of Anheuser-Busch’s $500,000,000 6.450% Debentures due 2037 in August 2007, bookrunner with respect to the offering of Anheuser-Busch’s $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 AmBev’s acquisition of the remaining stake in Quilmes Industrial SA, which is referred to as Quinsa, in July 2007, acted as bookrunner on AmBev’s BRL 300 million senior unsecured notes due 2017 and in July 2006, acted as

bookrunner on AmBev’s 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 Citi’s 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 Citi’s 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.

 

Anheuser-Busch’s 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 InBev’s $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 InBev’s $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-Busch’s business, many of which are beyond Anheuser-Busch’s 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-Busch’s 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-Busch’s 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-Busch’s 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.

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-Busch’s “Blue Ocean” program and pricing initiatives, are summarized below:

 

 

 

 

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-Busch’s 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 InBev’s 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:

 

 

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 lender’s obligations to

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 Moody’s. 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 obligor’s 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.

 

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:

 

 

 

Anheuser-Busch’s 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-Busch’s 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-Busch’s 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 Company’s 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

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-Busch’s 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-Busch’s current executive officers, other than Mr. Busch IV) will be eligible to receive an additional bonus ranging from 80% to 110% of the employee’s 2009 target bonus award. The extent to which the bonus exceeds 80% of the employee’s 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 officer’s 2009 target bonus is equal to his/her 2008 target bonus.

 

Enhanced Severance.  The retention plan also provides that the same group of approximately 360 employees (including Anheuser-Busch’s 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-Busch’s 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 individual’s “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.

 

 

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-Busch’s 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-Busch’s 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-Busch’s enhanced retirement program, investment banking, legal and other expenses relating to the Merger and the potential alternative transactions with a third

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-Busch’s 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).

 

 

 

 

Treatment of Outstanding Equity Awards

 

Acceleration of Equity Awards.  Pursuant to the terms of Anheuser-Busch’s 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

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:

 

 

 

 

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-Busch’s 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-Busch’s existing D&O Insurance, with terms, conditions, retentions and levels of coverage at least as favorable as Anheuser-Busch’s 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-Busch’s 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-Busch’s current insurance carrier with respect to Anheuser-Busch’s existing D&O Insurance with terms, conditions, retentions and with levels of coverage at least as favorable as provided in Anheuser-Busch’s 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 officer’s or director’s 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-Busch’s 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 indemnitee’s 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.

 

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:

 

 

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 stockholder’s 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 stockholder’s 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. holder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS.

 

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

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 early 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

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 OFT’s 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 CoCo’s 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.

 

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.

 

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-Busch’s 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-Busch’s 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-Busch’s 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-Busch’s 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-Busch’s 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-Busch’s 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.

 

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-Busch’s 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.

 

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 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.

 

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 InBev’s 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.

 

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:

 

 

 

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.

 

 

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-Busch’s 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.

 

 

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.

 

In the Merger Agreement, Anheuser-Busch made representations and warranties relating to, among other things:

 

 

In the Merger Agreement, InBev and Merger Sub each made representations and warranties relating to:

 

 

Many of Anheuser-Busch’s 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: