CVC ordered to pay AB InBev €129m after switching Freshfields for A&O

CVC Capital Partners has been ordered to pay €129m (£103m) to Budweiser brewer Anheuser-Busch InBev (AB In Bev) in a court battle over a 2009 deal, after turning from Freshfields Bruckhaus Deringer to Allen & Overy (A&O).

The private equity house has gone through three firms – having previously instructed Freshfields on the original deal and SGH Martineau on the litigation – during the course of the dispute. A&O partner Lawson Caisley led the case at the latest stage.

Last week Mr Justice Blair awarded AB In Bev €129m in a consquential hearing following an April judgment. The court in April found AB In Bev was owed a further payment from CVC in connection with the sale of Staropramen lager brewer StarBev due to the structure of the deal.

CVC bought StarBev from in 2009 for $2.2bn, instructing Freshfields private equity heavyweight Chris Bown. Bown later left the firm to join the private equity house (26 November 2013). The deal included a contingent value right (CVR), entitling AB InBev to future earnings from the business should it perform well, pegged to CVC’s return on investment.

Two years later Bown advised CVC on the $3.4bn sale of StarBev to US brewer Molson Coors, handing CVC future income in the form of $500m in convertible debt. The deal led to a head-to-head fight between CVC and AB In Bev, which argued it was due additional payments as a result.  

In October 2012 CVC turned to SGH Martineau consultant David Ostroff to seek a Commercial Court declaration that the return it received following the sale to Molson Coors did not trigger AB InBev’s right to payment.

At the beginning of the following year the private equity house switched to Freshfields for advice, but just months later CVC instructed Caisley instead.

AB In Bev, litigating through its parent company Interbrew Central European Holdings (ICEH), stuck with Skadden Arps Slate Meagher & Flom to launch a counterclaim. The firm fielded global international litigation and arbitration co-head David Kavanagh.

Blair J agreed with the brewer’s argument that the Molson Coors transaction was structured with the purpose of reducing the payments to AB InBev under the CVR.

Each side won on two out of four issues though Blair J said ICEH was the “overall winner” and entitled to an order for costs. He ruled that ICEH should have 75 per cent of its £1.616m costs and ordered an interim payment of £640,000.

Caisley instructed One Essex Court’s Tony Grabiner QC, Simon Colton and Nehali Shah for Starbev.

ICEH was represented by 3 Verulam Buildings’ Ali Malek QC and Richard Brent, instructed by Skadden partner Kavanagh.

The legal line-up 

For the claimant Starbev GP Limited

Allen & Overy partner Lawson Caisley, instructing One Essex Court’s Tony Grabiner QC, Simon Colton and Nehali Shah

For the defendant Interbrew Central European Holdings BV

Skadden Arps Meagher & Flom partner David Kavanagh, instructing 3 Verulam Buildings’ Ali Malek QC and Richard Brent