Afterhours Edition: Anheuser-Busch Rejects Belgian Ultimatum; InBev to Clarify Rules of War before Launching Offensive


Anheuser-Busch's board called InBev's offer "financially inadequate" after markets closed today, ending two weeks of silence with a unanimous rejection for Carlos Brito's company. The Belgian/Brazilian brewer had already fired the first hostile shot across the bow of Anheuser, announcing this afternoon that they filed suit in Delaware to confirm that Anheuser's entire board of directors can be removed without cause.
While the Journal's David Kesmodel undersells the fireworks to come by referring to the "possible takeover battle" looming, his colleague Heidi Moore is more helpful: "the charm offensive is over and InBev is ready for war." Moore describes Brito as "the diplomatic, silent assassin of deal making," the suave Brazilian counterpart to Steve Ballmer's portrayal of Maxwell Smart (or FEMA). The belligerent language throughout Moore's article is particularly entertaining since instead of being the victim, it's the Belgian company that is pouncing on an unprepared and largely defenseless target.

InBev is aiming for a court ruling allowing it to oust all Anheuser directors. A 2006 amendment to Anheuser's charter declassified its board and gave new directors one-year terms, and the declassification allows shareholders to dismiss them at will courtesy of Delaware law. However, the brewer grandfathered in the existing board members, five of whom are still serving their old three-year terms and won't be up for election until 2009; InBev seeks to preempt any claim that the five are not subject to shareholder dismissal.
Carlos Brito's spurned courtship has become a rough wooing. The complaint bluntly declares that InBev's intent is "to remove all directors of AB without cause" as soon as he gets his own nominees and registers with the SEC. The court filing itself refers to August Busch as "Busch IV" throughout, as if he were the scion of a now-assimilated German dynasty.
-senior Somme correspondent Andrew


Bookie Confessional, Early Baseball Edition

Mike is my best baseball client. He bets three or four grand a night, spread out over the whole card. He can't possibly win over time. Sadly, such golden geese occasionally shit on the lawn. That's what Mike did Friday, when he called and asked me to give him another bookie's number. Nobody in particular—just anybody's. He wanted a second place to bet. Basically he was sitting at his regular table and asking the Maitre d' where ELSE he should go to dinner. I told him to call me back Saturday. Well, I fumed awhile, then it came to me. Mike had rarely talked to Faithful Assistant. I summoned Faithful Assistant and told him his dreams were about to come true: he was opening his own shop, with exactly one disposable cell phone, and exactly one very good customer. Turns out that wasn't Faithful Assistant's dream. His dream involves some newly single woman with expensive tastes: the weasel told me that if he was going to play this charade it was going to cost me a full 15% of Mike's losses on both phone numbers. I was outraged and we started negotiating and by the time we were done 15% had become 20%. After making a mental note never to negotiate with Faithful Assistant again, I picked up the phone to hire the new book's collection agent. Melody, a good customer's wife, asked me for a job a couple months back. I offered and she accepted this part-time gig as an audition. Mike had his new place to play, Faithful Assistant was angling for a raise to 30%, and I set up a Monday meeting with Melody to tell her how all this would go down. Melody was a quick study. Faithful Assistant was her boss-and-contact and she was supposed to pass by Mike's office every Tuesday afternoon to pay or collect. She wanted to know what to do if Mike didn't have the money. She was disappointed to learn she should do nothing, just call us. I don't think she wanted to break his legs, but I think she wanted to give him a serious telling off, preferably in front of people. Too bad—that's not the way it works. It's a non-issue anyway: Mike pays. Turns out the 20% I'm paying Faithful Assistant is money well spent: he quickly put together that Mike is betting the same teams with both our places. That might be the stupidest piece of betting I've ever laid my eyes on. He calls one number, bets the Yanks, then calls the second number and bets the Yanks again. His second price is almost always worse—how much worse, well, it depends on how greedy we feel. There is no logic to this—he ought to put his whole bet in at the first place he calls, or better yet call both joints for prices and put the bet in at the shop with the better price. (Faithful Assistant is routinely varying prices on the Mike Phone by a penny or two anyway.) The only way Mike's current plan would make sense is if Mike was putting in maximum sized bets and needed to get down two max bets whatever the cost – but that's not happening: Mike's just putting down a few hundred at each place. Aspiring MBA-er Faithful Assistant says that Mike is trying to spread out his “credit risk," so that if one shop goes bust owing him money, he still has the other. Our shenanigans aside, that helps Mike little: If you think your bookie can't pay, don't spread out your risk—just stop calling him and find someone else you're actually comfortable with. It's a bookie joint, not a bank. So we were a little surprised about this but the final shock was Melody's. Melody showed up on Tuesday at Mike's office to pick up $600. She won't have to bother going downtown anymore: She knows “Mike” well: their kids are best friends since they've been neighbors for nine years.

Exchange Follies: Consolidated Tape Edition

Just weeks after telling Congress that doing their jobs has become too damned hard, the stock exchanges are providing more evidence. This time, the problem is the consolidated tape, which provides trade data. Seems it went out for about an hour at the New York Stock Exchange yesterday, making it tough to see in anyone had traded in 165 unimportant securities like State Street Corp. stock. And NYSE's snafu follows a consolidated tape screw-up at Nasdaq last week; while NYSE's server error only messed with some of its stocks, Nasdaq's consolidated tape feed went totally blank on Thursday.