Anheuser-Busch--already feeling intense heat surrounding its much-awaited response to InBev's $46 billion unsolicited takeover bid amid catastrophic flooding affecting its home base of St. Louis, Mo.--has now been subpoenaed by the Internal Revenue Service as part of a probe into the finances of the Rev. Al Sharpton's National Action Network (NAN) charity.
A-B confirmed last week to The New York Post that the company had received an IRS subpoena and is cooperating with the federal investigation, but declined further comment.
The Post reported that A-B's was one of a "flurry" of subpoenas issued to the "most generous corporate donors" to NAN, although the paper did not specifically name other companies that had been subpoenaed. Both the IRS and the U.S. Attorney's Office in Brooklyn have been conducting ongoing investigations into Sharpton's finances and oversight of NAN--going back to Sharpton's 2004 run for president, according to the paper.
In an earlier story, on June 15, the Post reported that numerous corporations, plus some labor unions, had contributed to NAN in recent years, allegedly under political pressure from the group. "Terrified of negative publicity, fearful of a consumer boycott or eager to make nice with the civil-rights activist, CEOs write checks, critics say, to NAN and Sharpton--who brandishes the buying power of African-American consumers," the paper reported.
A-B's Web site reports that the company contributed between $100,000 and $499,999 to NAN last year--one of scores of significant A-B contributions to not-for-profits ranging from the Advertising Council to healthcare and disease research organizations, regional and community charities, environmental and animal welfare groups and others. The list includes a significant number of organizations serving the interests of African-Americans and Hispanics, including the NAACP, 100 Black Men of America, National Black Caucus of Local Elected Officials Foundation, National Conference of Black Mayors, Congressional Black Caucus Foundation, Congressional Hispanic Caucus Institute, and Hispanic Scholarship Fund.
Other corporate contributors to NAN cited by the Post include Colgate-Palmolive ($50,000), Macy's and Pfizer (each contributing "thousands"), and nearly 50 companies that helped sponsor NAN's annual conference in April, such as PepsiCo, General Motors, Wal-Mart, FedEx, Continental Airlines, Johnson & Johnson and Chase.
As of its last publicly available filing in 2006, NAN owed $1.9 million in payroll taxes and penalties, and Sharpton personally owes more than $900,000 in federal taxes and more than $365,000 in New York City taxes, according to the Post. Sharpton has denied wrongdoing and maintains that the probes are politically motivated actions aimed at undermining NAN and the work of civil-rights organizations.
Meanwhile, back in St. Louis, A-B declined last week to comment on media reports that its board would be meeting at headquarters on Friday to discuss the InBev offer, and said its lack of ability to comment should not be interpreted as indicating either support or opposition to the offer.
The Financial Times reported that the board would be considering a number of options, including the InBev bid valuation, and that some board members might consider the $65-per-share offer too low.
But the valuation is far from the only factor that A-B must consider. Belgium brewer InBev's offer has stirred up a hornet's nest of support and opposition from sources ranging from investors to politicians.
Even as InBev chief executive Carlos Brito told Capitol Hill lawmakers and reporters last week that the company would not raise its offer of $65 per share, industry experts were speculating in various media that A-B might be able to successfully pressure InBev for as much as $68 to $75.
Furthermore, unverified reports continued to circulate that A-B might be considering an attempt to buy Mexican brewer Group Modelo to raise its value, and thus be a more costly takeover target.
The raft of other pressures on A-B included:
* A letter to the A-B board from Sen. Claire McCaskill (D-Mo.) urging the board to reject the takeover offer and keep its independence in consideration of what "this great and powerful company" represents to "St. Louis, the state of Missouri and the rest of America." McCaskill vowed to do everything in her power to stop the deal.
* Missouri's other senator, Republican Christopher "Kit" Bond, also issued a statement opposing the deal. Missouri Governor Matt Blunt not only expressed opposition, but asked the Federal Trade Commission to review the potential for a monopolistic effect on the beer sector and damage to the state's economy.
A-B employs about 6,000 workers in the state. InBev executives have stated that they would like to keep the business in St. Louis.
* A class-action petition filed last week against the A-B board by attorney Judy Cates, stating that it represents A-B stockholders, maintains that the board has failed stockholders by not already accepting the InBev offer. The action alleges that A-B directors are protecting their own financial interests, rather than those of stockholders, by not immediately accepting the proposal.
St. Louis Post-Dispatch columnist Bill McClellan, writing about the class-action suit and the InBev bid scenario on Friday, acknowledged that there is much about the deal that he doesn't understand, but concluded that he doubts that the money involved for mostly already-wealthy board directors is the main issue.
"It seems too early to know if the board is going to resist the deal. Maybe yes. Maybe no," McClellan wrote. "At the very least, the directors owe it to the stockholders to consider the offer carefully. Does the offer represent a premium? Sure. But are there other factors to consider? Certainly. A responsible board ought to take its time and study the proposed deal."
McClellan also questioned why it might be all right for a U.S. brewery to perhaps buy an iconic Mexican brewery [Group Modelo], but somehow "immoral" for a Belgian-Brazilian brewery to buy a U.S. brewery.
"And why does the Busch family still run the brewery like a family business when the family owns such a small stake in it?," he pondered. "And why has the stock been stagnant when the brewery is the top seller of beer in America? I only know it's sad when the hyenas start to gather. And for the record, I am making no moral comparison between class-action lawyers and hyenas. I don't want the animal-rights folks to sue me."
McClellan acknowledged that he'd once been personally sued by attorney Cates for $3 million, but stressed that he did not want to "prejudge" the class-action lawsuit or "let personal feelings get in the way."