Reuters: Regulatory News: UPDATE 1-AB InBev buys out Corona maker Modelo for $20 bln

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UPDATE 1-AB InBev buys out Corona maker Modelo for $20 bln Jun 29th 2012, 06:33 Fri Jun 29, 2012 2:33am EDT * Cash transaction valued at $20.1 bln * AB InBev says had added $14 bln of additional bank facilities * AB InBev expects $600 mln of annual synergy savings * Modelo to sell 50 pct stake in Crown Imports to Constellation By Philip Blenkinsop BRUSSELS, June 29 (Reuters) - Anheuser-Busch InBev, the world's biggest brewer, said it would swallow the half of Grupo Modelo it does not already own for $20.1 billion in the latest of a string of deals by big brewers looking for growth in emerging markets. The owner of Budweiser and Stella Artois beers said on Friday it had reached agreement with Modelo's controlling families giving it a leading position in a growing domestic beer market and the best-selling Mexican beer Corona Extra. Modelo founded in 1925, is Mexico's biggest brewer with a 50 percent plus market share where it operates in a virtual duopoly with Heineken's FEMSA Cerveza, while Corona is the biggest imported beer in the lucrative United States market. AB InBev is attracted to Modelo by a Mexican beer market growing at around three percent a year and cost savings that the company said would be at least $600 million per year. AB InBev said it had added $14 billion of new bank loans to fund the all-cash transaction. Two Modelo board members had committed to invest $1.5 billion of their proceeds in AB InBev shares to be delivered within five years. The two would also join AB InBev's board. In a related but separate transaction, Modelo would sell its 50 percent stake in joint venture Crown Imports to partner Constellation Brands Inc for $1.85 billion. Crown Imports distributes Modelo beers in the U.S. in a deal that runs to the end of 2016. If AB InBev had wanted to buy out Constellation and distribute the beer itself it would have pushed its market share in the United States to above 50 percent, leading to anti-trust concerns. Link this Share this Digg this Email Reprints

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