On October 16, 2008, Grupo Modelo, S.A.B. de C.V., its Series A Shareholders, and its subsidiary Diblo, S.A. de C.V. (collectively, the “Modelo Parties“) filed a notice of arbitration against Anheuser-Busch Companies, Inc., Anheuser-Busch International, Inc., and Anheuser-Busch International Holdings, Inc.  According to the Anheuser-Busch press release on the matter:

The notice of arbitration claims the transaction between Anheuser-Busch Cos. Inc. and InBev S.A./N.V. violates provisions of the 1993 investment agreement between Anheuser-Busch International Holdings Inc., Modelo and other parties. It seeks pre-closing and post-closing remedies, including an order prohibiting Anheuser-Busch from exercising certain governance rights under the investment agreement, from impairing the right of first refusal of the Series A shareholders under the investment agreement and from any other alleged breach resulting from closing the transaction with InBev or otherwise, as well as monetary damages.

The notice of arbitration is not a public document, but based on our review of the 1993 Investment Agreement, it appears that the centerpiece of the Modelo Parties’ argument is Section 6.6 of the Investment Agreement, which prohibits the parties from selling or offering to sell their Grupo Modelo shares to “any [person or entity] or its controlling shareholders engaged, directly, or indirectly, in the production, distribution, or sale of beer in or to the United States or Mexico”.  As we noted in a July 28, 2008 post, this argument appears to be a stretch of the plain language of the 1993 Investment Agreement, as amended by the First Amendment and Second Amendment thereto.