Reuters: Regulatory News: UPDATE 1-US challenges Anheuser-Busch's purchase of Grupo Modelo

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UPDATE 1-US challenges Anheuser-Busch's purchase of Grupo Modelo Jan 31st 2013, 16:05 Thu Jan 31, 2013 11:05am EST WASHINGTON Jan 31 (Reuters) - The U.S. Justice Department has filed a lawsuit seeking to stop Anheuser-Busch InBev SA from buying the half of Mexican brewer Grupo Modelo that it does not already own, saying the $20.1 billion deal would lessen competition in the U.S. beer market. Trading in Constellation Brands, which would have distributed Corona beer in the United States if the transaction had been approved, was halted after it dropped 23.8 percent. The announcement pushed down AB InBev's share price by 5 percent. Shares in Mexican brewer Grupo Modelo fell to a seven-month low, down 9.5 percent to 105 pesos on the Mexican exchange. InBev, which bought Anheuser Busch in 2008, was the top U.S. brewer by far with 47 percent of the U.S. beer market going into the Modelo deal. It said it will contest the ruling. Because of this, the company meticulously crafted an agreement under which AB InBev would sell Modelo's stake in Crown Imports, its U.S. distributor, to Constellation Brands Inc for $1.85 billion. But this was not enough to satisfy the Justice Department. "If ABI fully owned and controlled Modelo, ABI would be able to increase beer prices to American consumers. This lawsuit seeks to prevent ABI from eliminating Modelo as an important competitive force in the beer industry," Bill Baer, assistant attorney general in charge of the Department of Justice's Antitrust Division, said in an emailed statement.

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