U.S. Department of Justice Settles on Revised ABI/Modelo Deal

The U.S. Department of Justice (DOJ), Anheuser-Busch InBev (ABI) and Grupo Modelo have agreed to a deal that will settle a DOJ lawsuit that blocked ABI’s proposal to fully acquire Modelo, producer and importer of Corona. The proposed acquisition is expected to close in June.

The agreement ensures that ABI will still acquire the 50 percent stake of Modelo that it didn’t previously own for $20.1 billion. This allows ABI to control Modelo operations overseas.

“The AB InBev and Grupo Modelo transaction has always been about Mexico and making Corona more global in all markets other than the U.S.,” said Carlos Brito, the CEO of ABI.

Constellation will acquire ABI’s stake in the Modelo brands sold in the U.S. by Crown Imports, another importer of Corona, for $2.9 billion. This will grant Constellation rights to distribution, marketing, pricing and Modelo’s brewery in Piedras Negras, Mexico, located near the Texas border and about 150 miles southwest of San Antonio.

ABI’s divestiture of Modelo’s 50 percent stake in Crown was announced last June and, hoping to shield the deal from the DOJ’s antitrust lawsuit, gave Constellation the stake for $1.85 billion. The addition of the brewery in Piedras Negras, which totals the acquisition at $4.75 billion and was announced in February, sweetens the deal for Constellation and eased the DOJ enough to settle the litigation.

The transaction, which will make Constellation the third biggest beer marketer and producer in the U.S., also includes a three year-transition agreement between ABI and Constellation. During this time, Constellation plans to invest $400 million to expand the Piedras Negras brewery and help it supply all of Crown’s demand for the U.S. marketplace. The brewery fulfills about 60 percent of Crown’s current demand.

The Mexican Competition Commission approved the revised acquisition with Constellation in early April.

Rob Sands, the president and CEO of Constellation, said that the deal will nearly doubles Constellation’s sales figures and will establish his brand as the owner and producer of Corona Extra, Corona Light and Modelo Especial.

“The Crown acquistion represents a significant milestone for Constellation as the most transformational event in the history of our 68-year-old company,” Sands said.

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