Starbev Gp Ltd v Interbrew Central European Holdings BV

Contractual deferred-consideration provisions must be construed by reference to their language, read with the agreement as a whole and tested against commercial consequences. Transaction costs incurred in acquiring the relevant business may form part of an investment amount where the contract covers cash applied in acquiring the relevant interests. Estoppel by acquiescence requires more than silence: absent a relevant relationship or contractual term, a duty to speak must be established, together with unconscionability or equivalent impropriety. An anti-avoidance clause referring to “the purpose” of a transaction ordinarily concerns its dominant purpose, not its sole purpose. A transaction may fall within such a clause even though it has subsidiary commercial purposes. Contractual examples and illustrations must be construed in context, alongside the operative payment provisions.

The claimant buyer and defendant seller entered into a 2009 sale and purchase agreement for brewing businesses. Deferred consideration was governed by a Contingent Value Right under which the seller could share in returns received on a later sale. The business was sold to Molson Coors in 2012, partly for cash and partly through a €500 million convertible note.

The parties disputed the correct Investment Amount, whether the seller was estopped from challenging the notified figure, whether the sale and note engaged the CVR’s anti-avoidance provisions, and which stepped Investment Threshold applied to later proceeds. Each party sought declaratory relief.

1. Investment Amount. The contractual definition covered the €20.4 million of transaction fees paid by Starbev in acquiring the business. Those fees were part of the acquisition expenditure and were “applied ... in acquiring” the relevant interests. The €15.3 million paid for services and recharged to Caspian also fell within the definition because the cash was applied in acquiring preferred equity certificates, which were Relevant Interests. Starbev was therefore entitled to a declaration that the Investment Amount was €717,489,388.03.
2. Estoppel. The estoppel by acquiescence claim failed. Silence could found acquiescence only where there was a duty to speak. The contract gave ICEH audit rights but imposed no duty to challenge the notified figure promptly. ICEH’s decision to wait until a sale made verification commercially relevant was not irresponsible, unconscionable or otherwise improper. Starbev knew that the figure might be challenged and had not shown detrimental reliance on any assumption that it was agreed.
3. Anti-avoidance. The convertible note was a transaction for the purposes of clause 4.4.3, although it formed part of the consideration for the wider sale and was negotiated at arm’s length. The examples in that clause were illustrative, not exhaustive. “The purpose” meant the dominant purpose, rather than the sole purpose. Objectively, the dominant purpose of the sale structure and note was to reduce payments due to ABI by deferring proceeds until the Investment Threshold increased. The note was therefore deemed to be an Equity Return to the extent that it reduced payments due under the CVR.
4. Stepped threshold. On the assumed facts relevant to this alternative issue, later proceeds would be tested against the Investment Threshold applicable when they were received. The illustration in the definition of Excess Equity Return had to be read with clause 4.1.1 and both thresholds. Starbev succeeded on this issue.
5. Starbev succeeded on issues (1) and (4); ICEH succeeded on issues (2) and (3). Consequential matters were adjourned for further submissions.