Anheuser-Busch InBev (NYSE:BUD) is believed to have reached a deal to acquire control of Grupo Modelo, the maker of Corona, for $20.1 billion. More importantly, the deal is said to be in compliance with government approval, reports Dealbook.
The Obama administration sued on January 31 to block the original deal, which would give Anheuser-Busch control of 46 percent of beer sales in the United States.
Full details of the agreement, negotiated by Anheuser-Busch and the Justice Department, will come by April 23, which needs to be cleared by the federal district judge overseeing the antitrust lawsuit.
“As we have said all along, any settlement would have to fully protect U.S. consumers by preserving the competition that Grupo Modelo currently provides, while giving a divestiture buyer the freedom and capability to compete vigorously going forward,” Gina Talamona, a spokeswoman for the Justice Department, said in a statement.
Constellation Brightens Up
An afterthought, but interesting detail, is what Anheuser-Busch plans to do with its 50 percent stake in Crown Imports— the company responsible for importing Corona into the United States. Right now it is believed…
Constellation Brands (NYSE:STZ), which already owns half of Crown, will purchase the remaining stake for $2.9 billion. Included in that figure are the rights to distribute Corona and other Modelo beer.
If the Anheuser-Busch acquisition of Modelo comes to fruition, which is likely although far from a guarantee, stocks for both Constellation and Anheuser-Busch will benefit greatly in the short- and long-term. However, Anheuser-Busch is likely to see their investment pay off in foreign markets, rather than in America.
Due in large part to the strong influence of microbrews on the American beer market, it will be hard for Anheuser-Busch to significantly take advantage of typical monopolistic benefits, such as price increases. Many foreign markets don’t have nearly as many microbreweries, thus becoming an easier target for Anheuser-Busch.
Constellation, oddly enough, may actually be the happiest player in the Modelo acquisition. The company will now own the entirety of Crown, meaning it will be responsible for shipping all bottles of Corona, and the plethora of other popular items Modelo ships, into the U.S. Additionally, this news signifies an even stronger relationship with Anheuser-Busch, which means that as the beer-making gargantuan grows, so will Constellation.