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Constellation Brands, Inc.
STZ, Anheuser-Busch InBev
BUD, and Grupo Modelo,
S.A.B. de C.V., have reached a final agreement with the U.S.
Department of Justice on the terms of a settlement of the Department of
Justice's litigation challenging AB InBev's proposed acquisition of the
remaining stake in Grupo Modelo that it does not already own.
Constellation will become a fully independent beer competitor in the U.S. with
perpetual rights for the Modelo brands currently sold by Crown and autonomous
control of distribution, marketing, promotion and pricing. In addition,
Constellation will have full control of its production and supply chain and
have full rights to create line extensions and new brands to continue to drive
the business.
"The Crown acquisition represents a significant milestone for Constellation as
the most transformational event in the history of our 68-year-old company,"
said Rob Sands, president and chief executive officer, Constellation Brands.
"Overall, this transaction will nearly double the sales of our company,
significantly enhance our earnings and free cash flow, diversify our profit
stream and provide new avenues for growth. It will solidify our place in the
U.S. beer market for the long term as the brand owner and producer of the
iconic Modelo portfolio of brands in the U.S. with Corona Extra, the best
selling imported beer, Corona Light, the leading imported light beer and
Modelo Especial, the third largest and the fastest growing major imported beer
brand in the category."
The parties have jointly approached the Court with the terms of a proposed
Final Judgment, which would fully resolve the Department of Justice's claims
in its litigation challenging the proposed acquisition.
The agreement is substantially in line with the revised transaction announced
on February 14, 2013. The proposed Final Judgment presented to the Court
includes additional binding commitments to the revised transaction, which are
designed to ensure a prompt divestiture of assets by AB InBev to
Constellation, the necessary build-out of the Piedras Negras brewery by
Constellation, as well as certain distribution guarantees for Constellation in
the United States.
Once the Stipulation and Order (which is filed concurrently with, and requires
the parties to comply with, the proposed Final Judgment) is signed by the
Court, AB InBev, Grupo Modelo and Constellation intend to move swiftly to
complete the pending transactions. These include an all-cash tender offer of
USD 9.15 per share by AB InBev for all the outstanding Grupo Modelo shares it
does not already own and, upon completion of the tender offer, the sale of
Grupo Modelo's Piedras Negras brewery and stake in Crown to Constellation.
The Mexican Competition Commission approved the revised transaction with
Constellation in early April 2013. Therefore, once the Stipulation and Order
is signed, all regulatory approvals necessary for closing the transactions
with Grupo Modelo and Constellation will have been obtained. The transaction
is expected to occur around the end of Constellation's first quarter fiscal
2014 or shortly thereafter.
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