ST. LOUIS - The biggest brewer in the U.S. and the biggest brewer in Mexico said Monday that they're in talks about teaming up -- maybe even a full takeover.
AB InBev and Modelo in talks about a deal
Anheuser-Busch has long ties with the Mexican brewer. But regulators might raise antitrust concerns.
By TIM LOGAN, St. Louis Post-Dispatch
But if that deal -- long predicted in beer circles -- eventually takes place, it would like trigger a thorny process of distribution deals and, perhaps, divestitures, that could shake up the North American beer business for years.
Anheuser-Busch InBev and Grupo Modelo, which makes Corona among other brands, both released statements Monday saying they are in "conversations" about "expanding their relationship." Both declined to elaborate, but several news organizations reported, based on anonymous sources, that the two companies are close to a deal in which Anheuser-Busch InBev would buy the 50 percent of Modelo it doesn't already own for a price ranging from $12 billion to $20 billion. The deal could be announced this week, the Wall Street Journal reported.
But uncertainty, and the wide potential price range, reflects some of the complexity of a merger between the two beer behemoths.
Foremost, it would unite the No. 1 and No. 3 biggest-selling brewers in the U.S., giving Anheuser-Busch InBev roughly 53 percent of the nation's beer market. That, say analysts, may prove too much for antitrust regulators, who could force Anheuser-Busch to import Corona and other Modelo beers through a third party, or even sell off some smaller brands.
Right now, Corona is sold in the U.S. through a joint venture with wine and spirits company Constellation Brands, though Modelo has the right to end that arrangement in 2016. Some of deal's potential $20 billion price tag would be a payment to Constellation, Bloomberg News reported Monday, citing anonymous sources.
Another option would be to sell off a brand or two. That's what happened after the 2008 takeover of Anheuser-Busch by InBev. Citing antitrust concerns, the U.S. Department of Justice forced InBev to sell U.S. rights to Labatt. The Canadian brew had less than 1 percent U.S. market share at the time, far less than Modelo's 5.7 percent today.
The companies have ties going back to 1993, when Anheuser-Busch bought a share of Modelo as part of a bid to expand in Mexico. By the late '90s, Anheuser-Busch owned half Modelo's stock.
When InBev launched its takeover bid in 2008, Anheuser-Busch executives saw buying the rest of Modelo as their best option to remain independent -- the so-called "Mexican defense" -- and the two companies were near a deal in which Anheuser-Busch would buy out Modelo, according to an account in "Dethroning the King," a 2011 book on the InBev takeover. But it fell through.
about the writer
TIM LOGAN, St. Louis Post-Dispatch
Kierlin was notoriously frugal and generous with the community, helping found and fund Winona’s Maritime Museum.