Grupo Modelo SAB fell the most since August 2011 after the U.S. sued to block the proposed $20.1 billion purchase of the Corona beer maker by Anheuser-Busch InBev NV.
The shares of Mexico’s largest brewer slid as much as 10 percent, the biggest intraday drop since October 2008, and were down 6.8 percent to 108.19 pesos at the close in Mexico City. The U.S. Department of Justice said in a lawsuit that the proposed sale would hurt competition and raise U.S. beer prices.
“In Mexico, we all took for granted that the deal would go through,” Gerardo Copca, an analyst with Metanalisis SA, said in a telephone interview from Mexico City. “It’s very surprising.”
AB InBev agreed in June to buy the half of Modelo it didn’t already own, which would give the world’s biggest brewer control of the top-selling U.S. beer brand, Bud Light, as well as No. 1 import Corona. While Leuven, Belgium-based AB InBev said it would “vigorously contest” the lawsuit, it said it no longer expected the transaction to close this quarter.
Modelo’s decline was the most among the 35 stocks on Mexico’s benchmark IPC index. The company’s shares traded at 97.95 pesos on June 22, the last business day before news broke that AB InBev and Modelo were in talks.
“We believe there will be high volatility” for Modelo until the issue is resolved, according to a report from two analysts at Corporativo GBM SAB, Karla Miranda and Marlene Finny. “However, it seems that this drop could open interesting entry points” for investors to buy the stock, they wrote.
Neither GBM nor Metanalisis rates Modelo shares.
The case is U.S. v. Anheuser-Busch InBev SA/NV, 13-cv-00127, U.S. District Court, District of Columbia (Washington).