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Scott Morrison, Of Counsel at Orrick, explores Re SABMiller plc and examines the impact of a scheme of arrangement in a merger transaction on shareholder class composition.
Re SABMiller plc  EWHC 2153 (Ch),  All ER (D) 47 (Sep)
The Companies Court held that, on the true construction of sections 895 and 896 of the Companies Act 2006 (CA 2006), it had jurisdiction to make an order summoning a meeting of only some of the applicant company's shareholders to whom a scheme of arrangement was proposed, other than two majority shareholders of the company, on the basis that those majority shareholders were prepared to give undertakings to the court at sanction to be bound by the scheme. The court held that CA 2006, ss 895 and 896 should be interpreted flexibly and purposively so as to coincide with the legislative intention to promote compromises and arrangements, so as to permit the court, where appropriate, to accept undertakings from creditors or members to be bound by the scheme.
The issue in this case arose in relation to a scheme of arrangement proposed by SABMiller plc (SABMiller) and its shareholders under CA 2006, s 896. The purpose of the scheme was to effect an acquisition of the entire issued share capital of SABMiller.
The scheme of arrangement was the first step in a three-step process that would ultimately see the merger of brewing giants Anheuser-Busch InBev SA/NV (AB InBev) and SABMiller. The $79bn takeover (a British record) had been approved by antitrust regulators in Europe, the US, China and South Africa.
The scheme of arrangement was to enable the SABMiller shareholders to receive 100 shares in Newbelco SA/NV (Newbelco) in consideration for their SABMiller shares. Schemes of arrangement are common in merger transactions as they allow them to be implemented without the need for all shareholders (or creditors, where applicable) to agree to the terms of the merger. The scheme of arrangement in this case would have allowed the terms of the merger to be imposed on all shareholders where 75% by value and a majority in number of shareholders present and voting agree to the terms of the merger. In order for the scheme of arrangement to be successful, each ‘class’ of shareholders must approve the terms of the proposed scheme by the requisite majority.
The SABMiller judgmen
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