March 29, 2024

DealBook: Anheuser- Busch Reaches Deal With Antitrust Regulators

Grupo Modelo makes Corona.Matt Rourke/Associated PressGrupo Modelo makes Corona.

11:36 a.m. | Updated

Anheuser-Busch InBev announced on Friday that it had received government approval for for its $20.1 billion deal to buy control of Grupo Modelo, the maker of Corona beer.

The Obama administration sued on Jan. 31 to block the takeover, arguing that the deal would give Anheuser-Busch InBev too much control over the American beer market, potentially reducing choices.

The agreement filed with the court on Friday resolves the regulatory concerns. Under the deal, Constellations Brands will pay about $5 billion to buy Anheuser Busch InBev’s 50 percent stake in Crown Imports, the company that imports Corona into the United States, as well as some breweries and operations. Constellation, one of the world’s largest wine companies, already owns half of Crown alongside Modelo.

Related Links



The Mexican Competition Commission approved the revised transaction in early April, the companies said.

Analysts have largely expected Anheuser-Busch InBev and the Justice Department to reach an accord on reasonable terms. The company has long regarded holding on to the United States rights to Corona and other brands less important than keeping control of Modelo’s operations elsewhere.

Anheuser-Busch InBev, the world’s largest brewing company, was created in 2008 through the $52 billion merger of Anheuser-Busch and the Belgian-Brazilian brewer InBev. The proposed $20.1 billion deal for Grupo Modelo would be the second-largest takeover in the beer industry after that merger, according to Thomson Reuters.

Article source: http://dealbook.nytimes.com/2013/04/19/anheuser-busch-reaches-deal-with-antitrust-regulators/?partner=rss&emc=rss

DealBook: Anheuser-Busch InBev Revises $20.1 Billion Takeover Plan

Grupo Modelo of Mexico is the maker of Corona beer.Victor Ruiz Garcia/ReutersGrupo Modelo of Mexico is the maker of Corona beer.

7:20 p.m. | Updated

Anheuser-Busch InBev moved on Thursday to rescue its $20.1 billion proposed takeover of Grupo Modelo of Mexico, the maker of Corona beer, by offering concessions aimed at persuading American antitrust authorities to let the deal proceed.

Under the revised terms, Anheuser-Busch InBev would sell the rights to Corona and other Grupo Modelo brands in the United States to Constellation Brands, one of the world’s largest wine companies, for $2.9 billion.

The agreement would also include the sale of a brewery close to the United States-Mexico border that is currently owned by Grupo Modelo, as well as the perpetual licensing rights to Grupo Modelo’s brands in the United States. If the revised deal goes through, Anheuser-Busch InBev will gain greater access to emerging markets like Mexico.

Anheuser-Busch InBev’s decision to sell Compañía Cervecera de Coahuila, the Mexican brewery that produces Corona, Corona Light and Modelo Especial, is an effort to satisfy regulators after the Justice Department sued last month to block the deal.

The lawsuit signaled a more aggressive approach by antitrust officials. It was the biggest deal to be opposed by the Justice Department since 2011, when the government sued to stop ATT’s proposed $39 billion takeover of T-Mobile USA, and the first major roadblock in a decade of consolidation by brewers around the world.

United States authorities had said the original Grupo Modelo merger proposal would increase Anheuser-Busch InBev’s control of the American beer market, enabling it to raise prices while reducing choice for local consumers.

Six packs of Anheuser-Busch's Budweiser and Grupo Modelo's Corona Extra beers.Joe Raedle/Getty ImagesSix packs of Anheuser-Busch’s Budweiser and Grupo Modelo’s Corona Extra beers.

Grupo Modelo is currently the third-largest beer company in the United States. Anheuser-Busch InBev is the largest, ahead of MillerCoors.

Anheuser-Busch InBev hopes the moves will resolve the antitrust issues raised by American authorities. “We decided to restructure the transaction to address the concerns from the Justice Department,” the company’s chief executive, Carlos Brito, said in an interview. “We are focused on getting this to the finish line.”

Mr. Brito declined to comment on the continuing negotiations with the Justice Department.

Carlos Brito, chief of Anheuser-Busch InBev.Sebastien Pirlet/ReutersCarlos Brito, chief of Anheuser-Busch InBev.

A Justice Department spokeswoman declined to comment on Anheuser-Busch InBev’s efforts to reduce its operations in the United States, but said the authorities would give any proposal serious consideration. “At the same time,” she said, “we would continue to prepare for litigation.”

Anheuser-Busch InBev, the world’s largest brewing company, was itself created in 2008 through the $52 billion merger of Anheuser-Busch and the Belgian-Brazilian brewer InBev. The proposed $20.1 billion deal for Grupo Modelo would be the second-largest takeover in the beer industry after that merger, according to Thomson Reuters.

In the last five years, Anheuser-Busch InBev has announced more than 15 additional takeovers, according to the data provider SP Capital IQ. In a series of multibillion-dollar deals in the beer and liquor sector, a small number of companies like SABMiller and Diageo have gained control of many top brands.

But authorities seem to have drawn the line at more mergers. The Justice Department’s lawsuit quoted internal documents from Anheuser-Busch InBev to demonstrate that the company’s prices had been undercut by Grupo Modelo. The authorities contend that the proposed deal would eliminate competition in the domestic beer market.

“This is the sort of product that matters to consumers,” William J. Baer, head of the Justice Department’s antitrust division, told reporters on Jan. 31. “If you have a very slight price increase that happens because of this deal, it could mean that consumers will pay billions of dollars more.”

With the concessions, Anheuser-Busch InBev maintains its focus on gaining access to the fast-growing Mexican market, which could help offset a slowdown in more mature markets like the United States and Western Europe.

“The quick settlement is no doubt surprising, but also shows practicality from the Anheuser-Busch InBev side,” Pablo Zuanic, an analyst at Liberum Capital, wrote in a note to investors on Thursday.

Anheuser-Busch InBev said it had increased its projected annual cost savings from the Grupo Modelo deal by 67 percent, to $1 billion, from estimates provided when the deal was announced last year. For Grupo Modelo, the terms of the takeover are unchanged, according to a company statement.

Anheuser-Busch InBev’s shares rose 6 percent, to $69.59, in trading in Brussels on Thursday, and Constellation Brands’ stock price jumped 37 percent, to $43.75, in trading in New York.

The agreement will give Constellation greater access to the American beer market. Under the original terms of the deal, it had agreed to pay $1.85 billion for the 50 percent stake that it did not already own in Crown Imports, a joint venture with Grupo Modelo.

Under the new terms, Constellation would gain control of the Corona brand across the United States, and it plans to invest $400 million in the brewery being sold by Grupo Modelo.

“These are favorable terms to gain control of an iconic brand in the U.S.,” Constellation’s chief executive, Robert S. Sands, said in an interview.

Lazard is advising Anheuser-Busch InBev on the deal, and Morgan Stanley is advising Grupo Modelo.

Article source: http://dealbook.nytimes.com/2013/02/14/anheuser-busch-inbev-revises-deal-for-grupo-modelo/?partner=rss&emc=rss

DealBook: Justice Dept. Seeks to Block Merger of Brewers

The deal would add Corona to Anheuser-Busch InBev's brands of beer.Carolyn Kaster/Associated PressThe deal would add Corona to Anheuser-Busch InBev’s brands of beer.

The Justice Department sued on Thursday to block Anheuser-Busch InBev’s proposed $20.1 billion deal to buy control of Grupo Modelo of Mexico, arguing that the merger would significantly reduce competition in the American beer market.

The deal, announced last summer, would add Corona Extra to the company’s formidable stable of brands, including Budweiser and Stella Artois.

But the Justice Department said in its lawsuit, filed in Federal District Court in Washington, that allowing the merger to proceed would reduce competition in the beer industry across the country as a whole and in 26 metropolitan areas in particular. The combined company would control about 46 percent of annual sales in the country, the government said, far outpacing Anheuser-Busch InBev’s closest competitor, MillerCoors.

Related Links

“If ABI fully owned and controlled Modelo, ABI would be able to increase beer prices to American consumers,” William J. Baer, head of the Justice Department’s antitrust division, said in a statement. “This lawsuit seeks to prevent ABI from eliminating Modelo as an important competitive force in the beer industry.”

The deal is the biggest to be opposed by the Justice Department since 2011, when it sued to block ATT’s proposed $39 billion takeover of T-Mobile USA.

The government’s move is the first significant effort to halt widespread consolidation in the beer industry in some time. Anheuser-Busch InBev itself was the product of a blockbuster merger between two of the world’s biggest brewers, and one of MillerCoors’s parents is the acquisitive SABMiller.

In its complaint, the Justice Department said Modelo had served as a low-price counterbalance to its larger competitors, resisting the price increases Anheuser-Busch InBev has promoted regularly.

In a statement, Anheuser-Busch said, “We remain confident in our position, and we intend to vigorously contest the D.O.J.’s action in federal court.”

Article source: http://dealbook.nytimes.com/2013/01/31/justice-dept-seeks-to-block-anheusers-deal-for-modelo/?partner=rss&emc=rss