Anheuser-Busch and Campbell Taggart Case

When assessing the economic damage to due to Paul Thayer and those that he tipped off about the acquisition of Campbell Taggart, it should be noted that some argue that this kind of insider trading circulates information and forces the stock to its “true value.” If we assume this argument to be flawed, then part of Anheuser-Busch stock dip after the announcement was due to the insider trading and the fact Anheuser-Busch probably paid more to acquire its target. Thayer and his friends trade the Campbell stock for nearly a month before any public announcement of the merger. On July 27 nearly half the volume was insider volume controlled by those individuals who were in violation of rule 14(e)-3 (See exhibit 2). The increased volume might have caused other investors to begin to look and make stock plays on Campbell. In theory if you keep buying a stock the price will eventually go up. That basic principle would apply here. According to Exhibit 5, Campbell Taggart had nearly 16 million issued shares. If you add up all the shares purchased by Thayer and co-defendants, listed in Exhibit 8, the insiders purchased over 113,200 shares inside of a month. Those purchases and increased volume could have caused a pre-mature spike in the stock price of the target company forcing Anheuser-Busch to pay more than it should have. In then month preceding the announcement, the target company’s stock price rose $2.63 per share. Multiply that by 15 million shares that Anheuser-Busch bought out right and there is a potentially nearly $40 million price difference that could have been attributed to insider trading.
Anheuser-Busch should take action with Paul Thayer, as well as the friends that Mr. Thayer was providing information to. A law suit should be brought against Paul Thayer, as well as the friends that participated in the insider trading of Campbell Taggart. As a result of the insider leak from Mr. Thayer, the stock price of Campbell Taggart rose dramatically at $2.63 a share. It