Constellation Brands, Inc. STZ
and Crown Imports (Crown) filed a Motion to Intervene in U.S. District Court
for the District of Columbia today to ensure the companies interests are
represented as part of the U.S. Department of Justice's (DOJ) complaint
against the proposed Anheuser-Busch InBev (AB InBev) acquisition of Grupo
Modelo (Modelo). Constellation has a separate proposed transaction with AB
InBev to fully acquire Crown, currently a 50/50 joint venture with Modelo.
Constellation and Crown were not named as part of the Jan. 31, 2013 DOJ
complaint; however, the complaint directly impacts both companies. This motion
will seek to permit Constellation and Crown to have direct access to the legal
proceedings.
As part of the motion to intervene, Constellation continues to affirm a number
of key points, including:
* The transactions are good for beer consumers as Crown will be a stronger
competitor in the U.S. The proposed transactions will enhance Crown's
status as an independent and competitive entity and will strengthen
Crown's position as a growing competitor to AB InBev in the U.S. beer
market. Crown will be 100 percent owned by Constellation and will have
complete, autonomous control as the brand owner with respect to its
distribution, marketing, promotion and pricing of the Modelo brands in the
U.S. AB InBev will not be selling Corona or the Modelo brands in the
U.S., and will have no influence over Crown.
* The transactions will improve competition in the U.S. beer industry.
Crown is the third largest beer company in the U.S. with a strong
portfolio of well-known brands. Crown is guaranteed supply of a certain
number of new products each year upon request. The transactions do not
increase concentration in the U.S. beer market. Crown, which prices,
markets and distributes Corona and the Modelo portfolio in the U.S., will
be completely independent after the transactions. Thus, competition will
increase as AB InBev will have no economic interest in Crown's business.
* Constellation Brands and Crown will compete in the future even more
effectively due to more favorable supply terms than previously existed.
Through a revised supply agreement, Crown is protected from interference
from its supplier and the cost of beer purchased is based on a formula
that adjusts annually at a rate below the U.S. Consumer Price Index.
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