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    A-B, Constellation Brands Revise Modelo Acquisition Agreement

    The former would divest the Corona and Modelo brands in the U.S. for $2.9 billion.

    BRUSSELS, Belgium -- Anheuser-Busch InBev today revised its agreement whereby it would pay $20.1 billion to purchase the 50 percent of Mexican brewer Grupo Modelo it did not already own.

    Under terms of the revised agreement, once the transaction is complete, A-B InBev would then immediately divest its full U.S. Grupo Modelo interest -- known for the Corona and Modelo brands -- for $2.9 billion.

    Victor, N.Y.-based Constellation Brands Inc. would acquire all U.S. Grupo Modelo assets. A-B InBev also said it would sell Compania Cervecera de Coahuila, Grupo Modelo's brewery in Piedras Negras, Mexico.

    A-B InBev was compelled to revise the agreement after the U.S. Department of Justice (DOJ) filed a lawsuit on Jan. 31, citing anticompetitive reasons.

    According to the DOJ, if approved, the deal would further expand A-B InBev, the world's largest brewer, by allowing it to take control of Modelo's Corona Extra and Modelo Especial beer brands. The DOJ argued that the transaction would hurt competition and raise beer prices for consumers.

    In addition, the DOJ argued that A-B InBev -- parent of Budweiser -- and Modelo combined would control about 46 percent of the annual U.S. beer market. MillerCoors is second at 29 percent of nationwide sales.

    As part of today's revised agreement, A-B InBev would fully own Grupo Modelo in every country except the United States.

    "The A-B InBev and Grupo Modelo transaction has always been about Mexico and making Corona more global in all markets other than the U.S., where the brands will be owned and managed by Constellation," said Carlos Brito, CEO of A-B InBev. "We are pleased to have reached this revised agreement that preserves the merits of the Grupo Modelo transaction while allowing us to move expeditiously to the Modelo integration process and the capture of approximately $1 billion of synergies, up from our original estimate of $600 million."

    In a prior transaction, A-B InBev agreed to divest Grupo Modelo's 50-percent stake in Crown, a joint agreement between Grupo Modelo and Constellation Brands. Hence, Constellation Brands now owns 100 percent of Crown.

    "The revised agreement with A-B InBev will make Constellation's Crown beer division a fully independent competitor and the third largest producer and marketer in the U.S. beer industry," said Rob Sands, CEO of Constellation Brands. "This is a transformational acquisition for our company as we will hold perpetual rights to Corona and the Modelo brands distributed by Crown in the U.S."

    The next expected step is for the DOJ to review the amended agreement and either raise additional objections or allow the transaction to be completed.

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