Big, market-changing deals take time, and apparently Anheuser-Busch InBev (AB InBev) and the U.S. Department of Justice need more time to consider whether AB InBev’s interest in completely owning Grupo Modelo is a good idea for the American marketplace. According to a recent AB InBev announcement:
Anheuser-Busch InBev, Grupo Modelo S.A.B. de C.V., Constellation Brands Inc. and Crown Imports LLC have made substantial progress in their discussions with the U.S. Department of Justice toward resolution of the Department of Justice’s litigation relating to AB InBev’s proposed acquisition of the remaining stake in Grupo Modelo it does not already own, based on the terms of the revised transaction announced on 14 February 2013.[On March 15], the companies and the Department of Justice jointly approached the court to request an extension of the stay on their current litigation, currently due to expire March 19 to April 9. The parties agree that an extension of the current stay will likely enable the parties to complete their discussion. If the parties reach an agreement, they will file a proposed consent judgment and related documentation with the court. There can be no assurance that the ongoing discussions will be successful.
In case you haven’t been following: AB InBev (the biggest beer baron in the world, currently a publicly traded company based in Leuven, Belgium) announced it was looking to buy the 50 percent of Grupo Modelo that it didn’t already own (a Mexican beer conglomerate, home to famous American imports like Corona and Pacifico). In January, the U.S. government filed a lawsuit to block the merger of these two giant beer companies, saying the deal would limit competition, lead to higher prices for American consumers and give AB InBev 46 percent of the domestic market.
Grupo Modelo has a joint venture with Constellation Brands (a Fortune 1000 company that is a world leader in premium wine). Through its Crown Imports LLC joint venture with Grupo Modelo, Constellation distributes and markets many leading imported beers across the United States, including Corona Extra, the No. 1 imported beer in America. Grupo Modelo had already agreed to sell its half of the joint venture to Constellation Brands in an effort to avoid antitrust concerns. Constellation would pay $1.8 billion to take complete ownership of Crown Imports, and AB InBev agreed to give up its option to buy the rights to distribute Modelo brands in the United States.
We’ll keep you updated if those moves with Constellation will satisfy the American government.