LEUVEN, Belgium & MEXICO CITY -- Anheuser-Busch InBev and Grupo Modelo SAB de CV have entered into an agreement under which AB InBev will acquire the remaining stake in Grupo Modelo that it does not already own for $9.15 per share in cash in a transaction valued at $20.1 billion.
Both companies' boards have approved the transaction; they expect it to close during first-quarter 2013. Click here to view the transaction website.
The companies will complete the combination through a series of steps that will simplify Grupo Modelo's corporate structure, followed by an all-cash tender offer by AB InBev for all outstanding Grupo Modelo shares. The tender price represents a premium of approximately 30% to the closing price of Grupo Modelo series C shares on June 22, 2012.
The agreement is a natural next step given AB InBev's existing economic stake of more than 50% in Grupo Modelo and the successful long-term partnership between the two companies, they said.
The combined company would lead the global beer industry with approximately 400 million hectoliters of beer volume annually and 2012 estimated revenues of $47 billion. Its operations would span 24 countries with enhanced opportunities for 150,000 employees across the globe.
The combination would create a significant growth opportunity worldwide from combining two leading brand portfolios and distribution networks. It would bring together five of the top six and seven of the top 10 most valuable beer brands in the world, each with distinct brand imagery and consumer positioning. The deal increases AB InBev's exposure to fast-growing developing markets.
Grupo Modelo's Corona would become a global flagship brand alongside Budweiser and join global brands Stella Artois and Beck's. The company would leverage opportunities to grow Corona globally, given AB InBev's established platform for distribution worldwide and the resources at its disposal.
The combination would bring together significant industry expertise and complementary geographic experience. Grupo Modelo has successfully imported and distributed Budweiser and Bud Light in Mexico for more than 20 years and has a strong track record as a leader in Mexico. The company has also developed Corona into the leading import beer in 38 countries around the world and successfully markets the brand in more than 180 countries.
The company will maintain Grupo Modelo's name, identity, heritage and headquarters in Mexico City, and the company will continue to have a local board. Two Grupo Modelo board members will join AB InBev's board.
AB InBev said it will preserve the integrity and quality of Grupo Modelo's brands.
"Grupo Modelo has been one of our most important partners for more than 20 years, and we are very pleased to evolve our long and successful relationship into this combination," said Carlos Brito, CEO of Anheuser-Busch InBev.
"There is tremendous opportunity from combining two leading brand portfolios and further expanding Grupo Modelo's brands worldwide through AB InBev's extensive global distribution network. Our admiration for Grupo Modelo's business and brands has only increased with time and we look forward to joining our historic and world-class breweries. We also recognize and appreciate the critical role that Grupo Modelo's shareholders and management have played in the company's longstanding success within Mexico and internationally and look forward to their continued contributions," he said.
"We have worked together with Anheuser-Busch InBev in a productive decades-long partnership, and it is time to cement our relationship through this merger," said Carlos Fernández, Chairman and CEO of Grupo Modelo. "Together we will be the leading global brewer with top brands around the world and positions in some of the fastest growing countries. This is an exciting transaction that will bring our brands and proud heritage to even more consumers internationally while offering an increasing number of AB InBev's brands in Mexico. Grupo Modelo's Board believes that this combination will deliver significant benefits for all stakeholders."
The existing partnership between AB InBev and Grupo Modelo, which dates back to 1993, is being enhanced through a series of transactions that will simplify and streamline the corporate structure of Grupo Modelo. As part of these transactions, Diblo SA de CV, the holding company for Grupo Modelo's operating subsidiaries, and Direccion de Fabricas (DIFA) SA de CV, a leading glass bottle manufacturer in Mexico with output largely dedicated to Grupo Modelo, will merge into parent Grupo Modelo for newly issued Grupo Modelo shares. Immediately after the mergers of Diblo and DIFA, AB InBev will commence an all-cash tender offer for all of the outstanding shares of Grupo Modelo that it will not own at that time.
The companies believe that the synergy potential from the combination would include the expansion of Corona, economies of scale through combined purchasing opportunities and the sharing of best practices around the world.
The combination is expected to yield annual synergies of at least $600 million.
Anheuser-Busch InBev is based in Leuven, Belgium. Its portfolio of more than 200 beer brands including Budweiser, Stella Artois and Beck's, Leffe, Hoegaarden, Bud Light, Skol, Brahma, Antarctica, Quilmes, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske, Hasseroder and Jupiler. In 2011, AB InBev realized $39 billion in revenue.