Anheuser-Busch Company was in the verge of fulfilling their diversification strategy. They were negotiating for the acquisition of Campbell Taggart, opting to pay $570 million for the said company. The acquisition was pretty much successful until the Securities and Exchange Committee started an investigation regarding the unusual activity of the Campbell Taggart Stock. There is a speculation that there was Insider Trading of the Campbell Taggart stock. Evidences lead that Mr. Paul Thayer, an executive of Anheuser-Busch, has leaked information to his friends about the acquisition of Campbell Taggart.
The legal counsel of Anheuser-Busch is now facing the decision of filing a suit against one of its former executives.
II. EXECUTIVE SUMMARY
Anheuser-Busch Company acquired Campbell Taggart Incorporated to fulfill their diversification strategy. The merger was accomplished flawlessly, until the SEC informed Anheuser-Busch that they were investigating unusual activity of the Campbell Taggart stocks because they were speculating that Insider Trading have taken place.
Mr. Walter Suhre, Vice President and General Counsel of Anheuser-Busch Company was contemplating whether to file a suit against Mr. Paul Thayer, a company executive who allegedly leaked material information to his friends about the acquisition, or to opt for out-of-the-court settlement.
This study focuses on the financial impact of the alleged Insider Trading to the acquisition of Campbell Taggart.
This study have come up with the suggestion that Anheuser-Busch should file a suit against Mr. Paul Thayer.
III. COMPANY HISTORY
Anheuser-Busch is the nation’s leading brewer of light, premium, and super-premium beers. Expensive European hops and beechwood-chip aging in eleven breweries across the country distinguish Anheuser-Busch beers such as Budweiser, Michelob, and Busch from much of their competition. Although principally a brewer, Anheuser-Busch has diversified, via various subsidiaries, into food products, refrigerator cars, metal containers, corn syrup, starch, and baker’s and brewer’s yeast. The company has also established two entertainment parks. These non-beer enterprises account for only 10% of Anheuser-Busch profits, but they are indicative of the company’s success.
In 1852 Eberhard Anheuser, a prosperous soap manufacturer in St. Louis, bought a failing brewery from a Bavarian immigrant named Sneider. Although the brewery’s cool underground caverns near the Mississippi River were conducive to good brewing, and although he had the will to succeed, Anheuser lacked one crucial ingredient for success—experience. He therefore hired his son-in-law, Adolphus Busch, another recent German immigrant schooled in the art of brewing, to be his general manager. That which the two men separately brought to the enterprise—an aggressiveness in business and a knowledge of quality brewing—has informed Anheuser-Busch’s history ever since.
IV. POINT OF VIEW
Mr. Walter Suhre
Vice President and General Counsel of Anheuser-Busch Company
V. TIME CONTEXT
1981 - 1984
VI. CASE CONTEXT
In 1984, the SEC accused Paul Thayer and eight others of insider trading. Some of Thayer's inside information came from his position on the board of Anheuser-Busch, where he had learned about Busch's 1982 merger with Campbell Taggart before the merger was publicly announced. The case deals with Busch's reaction after learning about the SEC suit. In considering possible actions by Busch, Mr. Suhre, the vice president and the general counsel of the company, realized that Anheuser-Busch would have to file a suit within a shorter period and that he might need to present his recommendations on this matter to the senior management. But before he could make a proposal, he wanted to assure himself that the company could demonstrate in court that it had been damaged by the insider trading. He needed both to confirm the company’s stated intention to sue...