Market Overview

Anheuser-Busch Nears Deal for Grupo Modelo


Anheuser-Busch (NYSE: BUD), the brewing company that makes Budweiser beer, is close to buying the second half of Grupo Modelo. That will give the company control over the maker of Corona beer, as it already owns half.

Grupo Modelo currently has a stock market value of about $23 billion, so the deal could cost Anheuser-Busch a fee in the region of $12 billion. The deal is expected to be concluded early this week, though it is still possible that it could break down.

If the deal does go through, it will strengthen Anheuser-Busch InBev's position as one of the biggest brewers in the world, adding Corona Extra to its already-impressive stable that includes Budweiser and Stella Artois.

Grupo Modelo was started in 1925, and its beverages are currently imported to the U.S. and marketed through Constellation Brands (NYSE: STZ). Last year, Grupo Modelo reported net income of $1.33 billion, up 18% from 2010.

The relationship between Anheuser-Busch and Grupo Modelo has been a rocky one following AB InBev's $52 billion acquisition of Anheuser-Busch in 2008. That deal saw the company inherit the 50% stake in Grupo Modelo and, in the process, it became the world's largest beer maker by sales.

Following InBev's acquisition of Anheuser-Busch, Grupo Modelo claimed that AB had acted improperly in not consulting the Mexican company before going ahead with the sale. However, an arbitration panel ruled in favor of the deal in 2010.

The Grupo Modelo deal is just the latest in a string of acquisitions for AB InBev, as it agreed to acquire Cerveceria Nacional for $2.5 billion earlier this year.

AB InBev is not the only brewing company on the acquisition trail either; Molson Coors (NYSE: TAP) agreed a deal to buy StarBev for $3.5 billion.

On Monday morning, Anheuser-Busch InBev is trading at about $70.30, up roughly 1.2%.

Follow me @BCallwood.

Posted-In: AB InBev Budweiser CoronaM&A News Contracts Topics General Best of Benzinga


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