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Saturday, December 14, 2019

Stockholder alleges Anheuser-Busch artificially inflated share prices

Federal Court

By Carrie Bradon | Jul 16, 2019

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NEW YORK (Legal Newsline) – A city's retirement system alleges it was damaged through the purchase of a beer, alcohol and soft drink distributor's shares because the company used a scheme to deceive the market and artificially inflate prices of its American depositary shares.

City of Sterling Heights General Employees' Retirement System, individually on behalf of all others similarly situated, filed a complaint on June 21 in the U.S. District Court for the Southern District of New York against Anheuser-Busch Inbev Sa/NV and its officers Carlos Brito, Felipe Dutra and John Blood alleging violation of the Securities and Exchange Act.

The suit concerns a class period of March 1 to Oct. 24, 2018. The suit states the defendant company is the successor of the former AB InBev, which was formed in 2008 when InBev acquired Anheuser-Busch Cos. for $52 billion. 

The plaintiff alleges the business combination caused Anheuser-Busch's debt to greatly increase, but the defendants told investors during the class period that "they had been deleveraging Anheuser-Busch in a manner that was consistent with the company’s internal targets."

"These positive statements by defendants created a false impression and materially misled investors about the company’s finances, including the sustainability of Anheuser-Busch’s dividends," the suit states. "...On Oct. 25, 2018, when Anheuser-Busch announced its financial results for the quarter and nine month periods ended Sept. 30, 2018, the company also revealed that it had slashed its dividend by 50 percent to 'accelerate deleveraging toward our optimal capital structure of around a 2x net debt to EBITDA ratio...'"

The suit states American depositary shares dropped in response to the announcement and approximately $15 billion of the company's market capitalization was erased.

The plaintiff alleges the defendants used a fraudulent scheme in which Anheuser-Busch disseminated false and misleading statements and concealed material adverse facts. The defendants' alleged actions misled the public about the company's operations, management and value, causing the plaintiff damages, the plaintiff alleges.

The plaintiff is seeking trial by jury. It is is represented by Samuel H. Rudman of Robbins, Geller, Rudman & Dowd LLP in Melville, New York, and Thomas C. Michaud of Vanoverbeke, Michaud & Timmony PC in Detroit.

U.S. District Court for the Southern District of New York case number 1:19-CV-05854

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