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AB Inbev, U.S., Said Ready to Seek Extension for Talks

AB InBev, U.S. Said Ready to Seek Extension in Modelo Talks
The discussions center on Anheuser-Busch InBev NV's revised proposal to sell control of all Modelo brands in the U.S., and a brewery in Mexico, to Constellation Brands Inc.. Photographer: Susana Gonzalez/Bloomberg

Anheuser-Busch InBev NV and the U.S. Justice Department will probably seek a court extension to continue talks about a proposal to settle a U.S. lawsuit to block the beermaker’s purchase of Grupo Modelo SAB, two people familiar with the matter said.

Talks between the companies and the Justice Department are progressing well and the extension request isn’t a negative sign, said the people, who asked not to be named because the talks are confidential. A federal judge in Washington agreed to suspend litigation until March 19 when the parties are scheduled to report on their progress.

The discussions center on AB InBev’s revised proposal to sell control of all Modelo brands in the U.S., and a brewery in Mexico, to Constellation Brands Inc., people with knowledge of the deal have said.

The Justice Department is reviewing Constellation’s plan to boost brewing capacity by about 70 percent at the Piedras Negras plant, now owned by Modelo, to ensure it can keep Modelo-brand products as a viable competitor in the U.S. beer market, said the people.

Laura Vallis, a New York-based spokeswoman for Leuven, Belgium-based AB InBev and Jennifer Shelley, a spokeswoman for Grupo Modelo in Mexico City, declined to comment on the matter.

Gina Talamona, a spokeswoman for the Justice Department, didn’t immediately respond to an e-mail and a phone call seeking comment.

Shares Drop

AB InBev shares extended declines on the news of the likely extension request, falling as much as 3 percent before closing down 1.6 percent, or 1.19 euros, at 73.05 euros. Constellation rose 24 cents to $44.95 at 1:01 p.m. in New York. Modelo shares were little changed at 111.70 pesos in Mexico City.

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

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