AB InBev, Grupo Modelo Confirm 'Discussions'

But claim that speculation on "possible transaction" is "premature"

Published in CSP Daily News

LEUVEN, Belgium & MEXICO CITY -- Anheuser-Busch InBev NV confirmed in a statements Monday that "there have been discussions between the company and Grupo Modelo regarding a possible transaction to expand its current relationship. These discussions may or may not lead to a transaction and any speculation on terms and conditions is therefore premature. There is a long history of partnership between Anheuser-Busch InBev and Grupo Modelo and AB InBev has great admiration for the Modelo business and its brands."

Grupo Modelo issued a similarly worded statement.

As reported yesterday in CSP Daily News, AB InBev seems poised to purchase Corona Extra maker Grupo Modelo for as much as $22 billion, but whether federal regulators will let the deal go through is a big question mark.

(See Related Content below for previous coverage).

In a research note cited by The Wall Street Journal, Bernstein Research said "it's very likely'' the Department of Justice "would object'' to the heightened beer-market concentration. It noted U.S. authorities in 2008 required InBev to dispose the Labatt beer brand, which had only a 0.7% market share, before allowing the Belgian brewer to buy Anheuser-Busch.

Big states such as California, Texas, Arizona and New York, where Modelo enjoys outsize market shares, could pose a particular stumbling block with U.S. antitrust authorities, Credit Suisse cautioned Monday, noting antitrust considerations are calculated on a state-by-state basis.

The Justice Department, AB InBev and Modelo declined to comment on potential antitrust concerns, said the report.

A costly takeover of Modelo makes it less likely AB InBev would try to acquire SABMiller PLC, the world's No. 2 brewer, any time soon, the Journal said. Industry insiders have long viewed SABMiller as the ultimate prize for AB InBev, which would gain big footholds in Africa and Asia through the acquisition.

Anheuser-Busch InBev is a publicly traded company based in Leuven, Belgium. It is the leading global brewer and one of the world's top five consumer products companies. Its brands include Budweiser, Stella Artois and Beck's, aw well as Leffe, Hoegaarden, Bud Light, Skol, Brahma, Antarctica, Quilmes, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske, Hasseröder and Jupiler. The company owns a 50% equity interest in the operating subsidiary of Grupo Modelo, Mexico's leading brewer and owner of the global Corona brand. Mexico City-based Grupo Modelo, founded in 1925, is the leader in Mexico in beer production, distribution and marketing. It brews and distributes 13 brands, including Corona Extra, Modelo Especial, Victoria, Pacífico and Negra Modelo. It exports six brands and is present in more than 180 countries. It is the importer of Anheuser-Busch InBev's products in Mexico, including Budweiser, Bud Light and O'Doul's. It also imports the Chinese Tsingtao brand and the Danish beer Carlsberg. Through a strategic alliance with Nestle Waters, it produces and distributes in Mexico the bottled water brands Sta. María and Nestle Pureza Vital, among others.