Market Overview

Constellation Brands to Purchase Remaining Interest in Crown Imports for $1.85 Billion


Crown Imports is slated to become a wholly owned subsidiary of Constellation Brands (NYSE: STZ).

The U.S. import beer business is currently divided between Constellation Brands, which owns 50 percent of the firm, and Grupo Modelo S.A.B. de C.V., which owns the other 50 percent. The 50-50 joint venture is coming to an end now that Anheuser-Busch InBev SA/NV (NYSE: BUD) announced that it will acquire Modelo for $20.1 billion. Constellation Brands will purchase the remaining 50 percent of Crown Imports from Anheuser-Busch InBev for $1.85 billion. The acquisition is expected to be completed during the first quarter of 2013.

"This is a significant milestone in the history of Constellation Brands," Rob Sands, President and CEO of Constellation Brands, said in a company release. "We have been the importer, marketer and seller of the Modelo brands in the U.S. for almost two decades. During this time, the Crown team has successfully built the Modelo portfolio into an enviable position of leadership and growth.

"Our full ownership of this significant beer business provides an additional strategic lever for driving overall profitable organic growth. We expect this transaction to dramatically enhance the financial profile of our company and it will solidify Constellation Brands' position as the largest multi-category supplier of beverage alcohol and the third largest total beverage alcohol company in the U.S."

Crown Imports owns a number of successful brands, including Corona Extra (reportedly the best-selling imported beer), Corona Light, and Victoria, among others.

"Upon closing, this transaction is expected to increase Constellation's debt to comparable basis EBITDA leverage to the mid-four times range when factoring in a full-year of the additional Crown EBITDA," said Bob Ryder, Chief Financial Officer of Constellation Brands, who was also quoted in the company release. "Due to the anticipated strong free cash flow generation of Constellation Brands, this leverage ratio should decrease to our targeted range of three to four times within the first 12 months after the close of the transaction. We plan to suspend our current share repurchase program. We currently have approximately $700 million remaining under our one billion share repurchase authorization."

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Posted-In: Anheuser-Busch InBev Constellation Brands Crown Imports ModeloM&A News Best of Benzinga


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