This article first appeared in the St. Louis Beacon: July 16, 2008 - Seeking to provide a smooth transition, InBev will offer retention bonuses to approximately 360 “key employees” of Anheuser-Busch as the Belgian company acquires the St. Louis company.
The employees’ titles weren’t identified in a document filed by both companies Wednesday with the Securities and Exchange Commission. Retention bonuses for top executives are common in mergers and acquisitions.
The bonuses, which will range from 80 percent to 110 percent of an employee’s target bonus in 2009, will depend on how well the combined company cuts costs in 2009, the SEC document says. About 60 of these employees could get an extra bonus in 2008 linked to the success of Anheuser-Busch’s expense-reduction efforts.
These key employees also will be eligible for enhanced severance if they lose their jobs within two years of the deal closing. Anheuser-Busch and InBev have predicted that the takeover, which will pay St. Louis-company investors $70-a-share in cash, will close by year-end.
The SEC filing adds a bit more meat to the bones of the agreement that was announced early Monday morning. The deal requires approval of shareholders at both companies, but Wednesday’s filing didn’t say when the votes would occur. InBev’s controlling shareholder has 63 percent of the voting power and will support the takeover.
The SEC document also identifies several heritage and employment issues that InBev had discussed as it tried to persuade Anheuser-Busch workers and St. Louis community members of its intentions.
The merged company “will preserve the [Anheuser-Busch] heritage and continue to support philanthropic and charitable causes in St. Louis and other communities in which [Anheuser-Busch] operates, including The Grant’s Farm and the Clydesdales operations,” the SEC document says. The Busch Stadium name will remain.
The combined company “reaffirms its commitment to the three-tier distribution system” in the U.S. and will work with Anheuser-Busch “existing wholesaler panel to strengthen the relationship” with wholesalers.
The one promise that included some wiggle room was InBev’s vow to keep Anheuser-Busch’s 12 U.S. breweries in operation. The merged company will make a “good faith commitment” to keep the plants open “provided there are no new or increased federal or state excise taxes or other unforeseen extraordinary events which negatively impact” brewing operations, the SEC filing says. The document didn’t provide details.
Although Anheuser-Busch and InBev characterized the $52-billion takeover as friendly, they also provided exit clauses. They can cancel the transaction by mutual consent or if the deal hasn’t been completed by March 19, 2009. If the deal falls apart under certain circumstances, Anheuser-Busch would have to pay InBev $1.25 billion. If InBev’s shareholders change their minds, InBev would owe Anheuser-Busch $1.25 billion.
Separately - and this is normal boilerplate language - Anheuser-Busch has the right to entertain a “good faith” offer by another suitor that its board believes is a “superior proposal” to the InBev offer.
And because they’re such good friends now, Anheuser-Busch and InBev said they would withdraw all of their dueling lawsuits.
Robert W. Steyer is a freelance business writer who has been covering the InBev Anheuser-Busch deal.