DealBook: Brewer to Buy Remaining Stake in Grupo Modelo

Sebastien Pirlet/ReutersCarlos Brito, chief of Anheuser-Busch InBev, the world’s largest brewer.

Anheuser-Busch InBev agreed on Friday to buy the half of the Mexican brewer Grupo Modelo it does not already own for $20.1 billion, the latest deal in the fast-consolidating global brewing industry.

Anheuser-Busch InBev, whose brands include Budweiser and Stella Artois, said it will pay $9.15 for each share of Grupo Modelo, a 30 percent premium to the company’s closing share price on June 22 before the deal was first reported.

The brewers said the deal would create a company with combined annual revenue of $47 billion with operations in 24 countries and 150,000 employees.

The acquisition would allow the company to expand Grupo Modelo’s brands, like Corona, into new countries worldwide, while giving Anheuser-Busch InBev access to Mexico’s fast-expanding domestic market, according to a joint statement from the companies.

“There is tremendous opportunity from combining two leading brand portfolios and further expanding Grupo Modelo’s brands worldwide,” said Carlos Brito, chief executive of Anheuser-Busch InBev.

Under the terms of the deal, Grupo Modelo will sell its 50 percent stake in Crown Imports, a joint venture with the wine and spirits company Constellation Brands, for $1.85 billion. After the deal, Constellation Brands will own 100 percent of Crown Imports.

As part of an effort to streamline Grupo Modelo’s ownership structure, Diblo, the holding company for the Mexican brewer’s operating subsidiaries, and Dirección de Fábricas, a local glass bottle manufacturer largely dedicated to Grupo Modelo, also will be merged into Grupo Modelo for newly issued shares in the brewer.

The acquisition of Grupo Modelo follows Anheuser-Busch InBev’s announcement in April that it was taking a controlling stake in the Caribbean drinks maker Cerveceria Nacional Dominicana for $1.2 billion.

The deal, which valued the C.N.D. at about $2.5 billion, strengthened Anheuser-Busch InBev’s presence across the Caribbean. The company plans to expand C.N.D.’s beer, malt and soft drink businesses in the Dominican Republic, Antigua, Saint Vincent and Dominica. C.N.D.’s brands include Presidente beer.

Anheuser-Busch InBev was formed in 2008 when the Belgian-Brazilian brewing company InBev acquired Anheuser-Busch for around $52 billion. The deal gave the newly named Anheuser-Busch InBev a 50 percent stake in Grupo Modelo.

The Grupo Modelo deal is the Anheuser-Busch InBev’s second-biggest takeover, trailing only the 2008 transformational acquisition of Anheuser-Busch. It also represents one of the largest transactions announced so far this year at a time when takeover activity has slowed, as concern about the global economy has sapped corporate confidence.

Anheuser-Busch InBev said it would pay for the remaining stake Grupo Modelo that it did not already own through cash reserves and a new $14 billion credit facility.

The companies said the deal would lead to around $600 million of annual cost savings. The acquisition is expected to close in the first quarter of 2013.

Lazard and the law firms Skadden, Arps, Slate, Meagher Flom, Sullivan Cromwell and Freshfields Bruckhaus Deringer advised Anheuser-Busch InBev on the deal, while Morgan Stanley and the law firm Cravath Swaine Moore advised Grupo Modelo.

Article source: http://dealbook.nytimes.com/2012/06/29/anheuser-busch-inbev-to-buy-remaining-stake-in-grupo-modelo-for-20-1-billion/?partner=rss&emc=rss