February 12, 2020

Anheuser-Busch Inbev/SabMiller (TBA 2015)

Deal SummaryCooperation | Conditions Precedent |Defense Strategy | Litigation Commitments | Remedy Commitments | Reverse Break Fees | Termination Provisions

(a)               Deal Summary. Anheuser-Busch Inbev announced an agreement to acquire SABMiller for about $108 billion on November 11, 2015. AB InBev retained the right to determine the strategy for gaining antitrust clearance and agreed to use its best efforts to do so. Both parties agreed to provide information and assistance that may reasonably be required for obtaining clearances and structuring remedies. AB InBev agreed that using “best efforts” to obtain clearances may require it to offer divestitures to regulatory authorities. AB InBev also agreed to a reverse break fee of $3 billion. The DOJ has issued a Second Request is continuing to investigate the merger. The agreement terminates if not completed within 18 months of the date of the announcement (May 11, 2017).

(b)               Cooperation. § 3.1 - 3.11: (3.1) Except where otherwise required by Law or a Relevant Authority, AB InBev shall: (a) determine the strategy to be pursued for satisfying the Pre-Conditions and obtaining any other Clearances, including: (i) the timing and sequencing regarding the discussion, offer or agreement of Remedies with Relevant Authorities; and (ii) the determination of Remedies discussed with, offered to or agreed with Relevant Authorities;  (b) contact and correspond with the Relevant Authorities in relation to the obtaining of the Clearances (including submitting and preparing all necessary filings, notifications and submissions); and (c) be responsible for the payment of all filing fees required in connection with the Clearances.

                        (3.2) Without prejudice to AB InBev’s rights to determine the strategy to be pursued in accordance with clause 3.1(a), AB InBev shall use its best efforts to secure the Clearances in sufficient time so as to enable Completion to occur by the Long Stop Date.

                        (3.3) For the purposes of Clauses 3.1 and 3.2 and the satisfaction of the parties’ respective obligations under this Agreement (and without prejudice to AB InBev’s rights to determine the strategy to be pursued in accordance with Clause 3.1(a)), AB InBev acknowledges and agrees its obligation to use “best efforts” under Clause 3.2 may require: (a) AB InBev to discuss, offer and agree to Remedies which entail the divestment of certain entities, assets, properties or businesses of the SABMiller Group or AB InBev Group; and (b) if any Clearance remains outstanding by the Long Stop Date, AB InBev to use its best efforts to enter into an arrangement with the Relevant Authorities or such other parties as may be necessary, by which the Transaction could be completed before such outstanding Clearance is obtained and which maintains the Relevant Authorities’ ability to obtain an effective remedy under the relevant merger control provisions including any conditions, undertakings or hold-separate arrangements (Hold Separate Arrangements) and upon entering into any Hold Separate Arrangements to waive the Pre-Conditions or Regulatory Conditions to which the relevant outstanding Clearance relates.

                        (3.4) The parties shall: (a) provide to each other, in a timely manner, such information and assistance as may reasonably be required for: (i) AB InBev to determine in which jurisdictions any merger control, regulatory or other filing, notification or submission with a Relevant Authority may be necessary for the purposes of obtaining the Clearances; (ii) the parties to make any filings, notifications or submissions to the Relevant Authorities as are necessary in connection with the obtaining of the Clearances, taking into account all applicable waiting periods; and (iii) the identification, structuring and preparation of any Remedies; and (b) ensure that all information necessary for the making of (or responding to any requests for further information consequent upon) any such filings, notifications, submissions (including draft versions) or the identification, structuring and preparation of any Remedies (and that is in the possession of, or reasonably obtainable by such party) is supplied accurately and as promptly as reasonably practicable (and for these purposes the parties agree that they shall take all reasonable steps to obtain relevant information from third parties (including through the exercise of contractual rights), it being acknowledged that a party shall not be in breach of this Clause as a consequence of any inaccuracies in any information originating from a third party (being a person other than a member, officer, employee or adviser of the SABMiller Group or the AB InBev Group (as applicable)), provided that such information and assistance will be provided in a manner reasonably designed to preserve applicable legal professional privilege and to limit the exchange of any competitively sensitive information in accordance with Clause 3.8. It is further acknowledged that in certain circumstances disclosure by one party to the other may nonetheless be prevented by obligations of confidentiality owed to third parties or by applicable Law.

                        (3.5) Without prejudice to the generality of Clause 3.4, and except to the extent that to do so is prohibited by Law: (a) AB InBev, or AB InBev and SABMiller jointly, or SABMiller, as may be required, will submit a filing, notification or submission (as required) to each Relevant Authority as soon as is reasonably practicable after the signing of this Agreement and in any event within any applicable mandatory time periods where it is necessary (and/or, in the case of a filing, notification or submission by AB InBev, expedient) to do so to obtain the Clearances; (b) the parties shall provide such co-operation as may reasonably be required by the other in connection with the preparation of all such filings, notifications or submissions (as required) referred to in Clause 3.5(a) and in relation to the preparation of any other submissions, material correspondence or material communications to any Relevant Authority in connection with the Clearances; (c) each of AB InBev and SABMiller shall provide, or procure the provision of, draft copies of all filings, submissions, material correspondence and material communications intended to be sent to any Relevant Authority in relation to obtaining any Clearances to the other and its legal advisers at such time as will allow the receiving party a reasonable opportunity to provide comments on such filings, submissions, correspondence and communications before they are submitted, sent or made and each party shall provide the other with copies of all such filings, submissions, material correspondence and material communications in the form finally submitted or sent (including, in the case of non-written communications, reasonably detailed summaries of material non-written communications), in each case, if requested by SABMiller, with a version in which any Regulatory Clean Team Information (as defined in the Clean Team Arrangements) is redacted; (d) each of AB InBev and SABMiller shall have regard in good faith to comments made in a timely manner by the other on draft copies of filings, submissions, material correspondence and material communications provided pursuant to Clause 3.5(c); (e) each of AB InBev and SABMiller shall notify the other, and provide copies (including, in the case of non-written communications, reasonably detailed summaries of material non-written communications), in a timely manner of any material communication or material correspondence from any Relevant Authority in relation to obtaining any Clearance. Each of AB InBev and SABMiller further agrees to keep the other reasonably informed as to the progress of any notification submitted pursuant to Clause 3.5(a), and shall give the other reasonable prior notice of any meetings or material calls with any Relevant Authority or other persons or bodies relating to any Clearance and shall allow advisers nominated by the other: (i) to attend any such meetings or calls (unless prohibited by the Relevant Authority, applicable Law or other person or body); and (ii) to make reasonable oral submissions at such meetings or calls (provided that such oral submissions have been discussed in advance); and (f) where reasonably requested by AB InBev or SABMiller, and insofar as permitted by the Relevant Authority, the other shall make available appropriate representatives for meetings and calls with any Relevant Authority in connection with the obtaining of any Clearances, provided that the requirements of this Clause 3.5 shall be subject always to the provisions of Clauses 3.1 and 3.8.

                        (3.6) AB InBev acknowledges and agrees that any information and/or assistance provided by SABMiller or any member of the SABMiller Group in order for AB InBev to pursue its strategy for satisfying the Pre-Conditions or Regulatory Conditions (pursuant to this Clause 3 or otherwise) shall be given on the basis that neither SABMiller nor any members of the SABMiller Group nor any of their respective officers, directors or employees shall incur any liability in respect of any loss or damage that AB InBev may suffer as a result of the provision of any such information and/or assistance (save, in each case, for loss or damage resulting from the gross negligence, wilful misconduct, bad faith, fraud or fraudulent misrepresentation of SABMiller, a member of the SABMiller Group or any of their respective officers, directors or employees).

                        (3.7) AB InBev further acknowledges and agrees that any failure (or alleged failure) to provide assistance and/or information requested by AB InBev of SABMiller or any member of the SABMiller Group for AB InBev to pursue its strategy for satisfying the Pre-Conditions or Regulatory Conditions (pursuant to this Clause 3 or otherwise) and/or any provision of assistance and/or information to AB InBev by SABMiller or any member of the SABMiller Group for such purpose shall not in any way affect SABMiller’s entitlement to receive the Break Payment (once a Break Payment Event has occurred) in accordance with the terms of Clause 9 of this Agreement (and subject always to Clause 9.2).

                        (3.8) If a provision of this Agreement obliges AB InBev or SABMiller (the disclosing party) to disclose any information to the other: (a) which the disclosing party reasonably considers to be competitively sensitive; (b) which the disclosing party is prohibited from disclosing by Law; or (c) where such disclosure would result in the loss of privilege that subsists in relation to such information (including legal professional privilege), the disclosing party shall disclose the relevant information to the other:  (i) pursuant to the Clean Team Arrangements or as the disclosing party and the other party may otherwise agree; or (ii) where disclosure in a manner contemplated by Clause 3.5(a) would reasonably be expected to have a material adverse effect on the disclosing party’s legitimate business interest, directly to a Relevant Authority (and in such circumstances, the disclosing party shall provide to the other a non-confidential version of such information).

                        (3.9) Each of AB InBev and SABMiller undertakes to keep the other informed promptly of (i) developments which are material or reasonably likely to be material to the obtaining of a Clearance and (ii) the satisfaction of the Pre-Conditions and the Regulatory Conditions. AB InBev further undertakes, without prejudice to the generality of the foregoing or Clause 3.5(f), from the date of this Agreement until such time as all of the Pre-Conditions and Regulatory Conditions have been satisfied or waived, on a fortnightly basis (or at such other longer intervals as SABMiller may request): (i) to provide SABMiller with a written report summarising the status of each outstanding Clearance and the progress made since the previous report, in a form to be agreed between AB InBev and SABMiller (each acting reasonably and in good faith); and (ii) if requested by SABMiller, to ensure that AB InBev’s relevant legal advisers attend a conference call with SABMiller’s legal advisers to discuss the status of each outstanding Clearance and the progress made since the previous report.

                        (3.10) To the extent that the parties provide each other with any information, assistance and/or access to senior management for the purposes of preparing for the integration of the businesses of the AB InBev Group and the SABMiller Group after Completion (which SABMiller is under no obligation pursuant to this Agreement to provide), any competitively sensitive information shall be provided pursuant to the Clean Team Arrangements.

                        (3.11) Notwithstanding any other provision of this Agreement to the contrary, nothing contained in this Agreement shall require either party or any of its concert parties (as defined in the UK Code) to take, or cause to be taken, any action with respect to the divestiture of any assets, properties or businesses of the SABMiller Group, Newco or the AB InBev Group, or any combination thereof, that is not conditional on completion of the Transaction, except as otherwise agreed by the parties.

(c)                Conditions Precedent. Appendix 1, Appendix 2(Part B): (Appendix 1) Pre-conditions to the transaction: . . . (b) All necessary notifications and filings having been made and all or any applicable waiting periods (including any extensions thereof) under the HSR Act and the rules and regulations made thereunder having expired, lapsed or been terminated as appropriate in each case in respect of the Transaction and the proposed acquisition of any SABMiller Shares or control of SABMiller by AB InBev or any member of the AB InBev Group.

                        (Appendix 2 Part B) Additional Conditions to the UK Scheme: In addition, AB InBev and SABMiller have agreed that the Transaction will (subject to the City Code and to the extent permissible by law and regulation) be conditional upon the following Conditions and, accordingly, the necessary actions to make the UK Scheme effective will not be taken unless the following Conditions (as amended if appropriate) have been satisfied or, where relevant, waived: . . . (b) if the Pre-Condition set out in paragraph (b) (US clearance) of Appendix 1 is waived, all necessary notifications and filings having been made and all or any applicable waiting periods (including any extensions thereof) under the HSR Act and the rules and regulations made thereunder having expired, lapsed or been terminated as appropriate in each case in respect of the Transaction and the proposed acquisition of any SABMiller Shares or control of SABMiller by AB InBev or any member of the AB InBev Group;

(d)               Defense Strategy. § 3.1(a): Except where otherwise required by Law or a Relevant Authority, AB InBev Shall: (a) determine the strategy to be pursued for satisfying the Pre-Conditions and obtaining any other Clearances, including: (i) the timing and sequencing regarding the discussion, offer or agreement of Remedies with Relevant Authorities; and (ii) the determination of Remedies discussed with, offered to or agreed with Relevant Authorities;

(e)                Litigation Commitments. N/A.

(f)                Remedy Commitments. § 3.3 (a)-(b): For the purposes of Clauses 3.1 and 3.2 and the satisfaction of the parties’ respective obligations under this Agreement (and without prejudice to AB InBev’s rights to determine the strategy to be pursued in accordance with Clause 3.1(a)), AB InBev acknowledges and agrees its obligation to use “best efforts” under Clause 3.2 may require:

                        (a) AB InBev to discuss, offer and agree to Remedies which entail the divestment of certain entities, assets, properties or businesses of the SABMiller Group or AB InBev Group; and

                        (b) if any Clearance remains outstanding by the Long Stop Date, AB InBev to use its best efforts to enter into an arrangement with the Relevant Authorities or such other parties as may be necessary, by which the Transaction could be completed before such outstanding Clearance is obtained and which maintains the Relevant Authorities’ ability to obtain an effective remedy under the relevant merger control provisions including any conditions, undertakings or hold-separate arrangements (Hold Separate Arrangements) and upon entering into any Hold Separate Arrangements to waive the Pre-Conditions or Regulatory Conditions to which the relevant outstanding Clearance relates.

(g)               Reverse Break Fees. § 1.1, 9.1(c)-(d). In this Agreement, the following words and expressions have the meanings given below: . . . Break Payment means the sum of US$3,000,000,000 (US$ three billion);

                        9.1 By way of compensation for any loss or damage (including, but not limited to, incurring substantial costs and expenses, lost opportunity costs, business dislocation, reputational harm or adverse market reaction) that may be suffered by SABMiller or its shareholders on the occurrence of a Break Payment Event, subject to Clause 9.2, AB InBev shall pay, or shall procure the payment by a member of the AB InBev Group of, the Break Payment to SABMiller in the event that, following the publication of the Announcement in accordance with Clause 2.1:

                        . . . .

                        (c) on or prior to the Long Stop Date, AB InBev invokes (and is permitted by the Panel to invoke) any Pre-Condition and/or any Regulatory Condition so as to cause the Transaction not to proceed, to lapse or be withdrawn; or

                        (d) any Pre-Condition and/or any Regulatory Condition has not been satisfied or waived by AB InBev by 11.59 p.m. (London time) on the date which is 14 days prior to the Long Stop Date,

(h)               Time Period and Other Conditions Under Which the Parties May Walk Away from the Agreement. § 11.1: Subject to Clauses 11.2 and 11.3, this Agreement shall terminate with immediate effect and all rights and obligations of the parties under the Agreement shall cease forthwith, as follows:

                        (a) if agreed in writing between the parties;

                        . . . .

                        (c) upon service of written notice by either party to the other, following a Break Payment Event;

                        (d) upon service of written notice by AB InBev to SABMiller prior to the Long Stop Date stating that either: (i) any Pre-Condition or Condition which has not been waived is (or has become) considered by AB InBev incapable of satisfaction by the Long Stop Date and, notwithstanding that AB InBev has the right to waive such Pre-Condition or Condition, AB InBev will not do so; or (ii) any Pre-Condition or Condition which is incapable of waiver is considered by AB InBev incapable of satisfaction by the Long Stop Date, in each case in circumstances where the invocation of the relevant Pre-Condition or Condition (or confirmation that the Pre-Condition or Condition is incapable of satisfaction, as appropriate) is permitted by the Panel;

                        . . . .

                        (h) if Completion has not occurred by the Long Stop Date.