AB InBev Said to Reach Agreement With U.S. to Buy Modelo

Anheuser-Busch InBev NV and the U.S. Justice Department reached an agreement over the company’s acquisition of Grupo Modelo SAB, two people familiar with the matter said.

A consent decree will be filed with a federal judge today seeking court approval, said the people, who asked not to be named because they weren’t authorized to speak publicly on the matter.

News of the settlement agreement comes before the April 23 court deadline to report to U.S. District Judge Richard Roberts in Washington. The agreement is based on AB InBev’s revised proposal made Feb. 14 that would have Modelo sell control of all its brands in the U.S., as well as a brewery it built in Piedras Negras, Mexico, to Constellation Brands Inc. (STZ), a winemaker and drink-distribution company.

The Justice Department sued Jan. 31 to block the merger, saying the transaction as initially structured would have hurt competition in the U.S. beer market and led to higher prices.

The U.S. has been reviewing Constellation’s plan to boost brewing capacity at the Piedras Negras plant by about 70 percent to ensure that Modelo-brand products remain viable competitors in the U.S. beer market, two people familiar with the matter said March 8.

Photographer: Susana Gonzalez/Bloomberg

Bottles of Grupo Modelo SAB brand beer are displayed for a photograph in Mexico City. Close

Bottles of Grupo Modelo SAB brand beer are displayed for a photograph in Mexico City.

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Photographer: Susana Gonzalez/Bloomberg

Bottles of Grupo Modelo SAB brand beer are displayed for a photograph in Mexico City.

Under the revised deal, AB InBev, which is based in Leuven, Belgium, also gave up an option to buy back a stake in Crown Imports LLC, the U.S. distributor of Corona and the other Modelo (GMODELOC) brands. As part of the plan, Crown, owned jointly by Mexico City-based Modelo and Victor, New York-based Constellation, would be entirely owned by Constellation.

Brewery Expansion

Constellation plans to invest about $400 million to expand the Piedras Negras brewery, which produces Corona, Corona Light and Modelo Especial, allowing it to supply all of Crown’s needs for the U.S. market.

AB InBev rose 1.9 percent on news of the agreement and was trading at 75.59 euros at 4:18 p.m. in Brussels. Constellation rose 1.2 percent to $47.91 in New York, while Modelo dropped 0.58 percent to 111.48 pesos in Mexico City.

The case is U.S. v. Anheuser-Busch InBev NV (ABI), 13-cv-00127, U.S. District Court, District of Columbia (Washington).

To contact the reporter on this story: Sara Forden in Washington at sforden@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net

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