Corona-Bud revise deal to appease regulatorsFebruary 14, 2013 @ 2:46 pm
NEW YORK (AP) - Anheuser-Busch InBev changed the terms of its proposed $20.1 billion acquisition of Mexican brewer Grupo Modelo Thursday in an attempt to push through a deal that federal regulators say will kill competition.
AB InBev is willing to sell Modelo's Piedras Negras brewery and give perpetual rights for Corona and the Modelo brands in the U.S. to Constellation for $2.9 billion, the company said Thursday. The Mexican brewery, which currently makes Corona, Corona Light and Modelo Especial, will give Constellation total control over the production of Corona and Modelo sold in the U.S.
Under previous terms of the complicated deal, Modelo would have sold its half of Crown Imports to wine maker Constellation Brands Inc. to address antitrust concerns. But InBev had the right to end its import agreement with Crown after every 10 years. In the new deal terms proposed, Constellation remains slated to buy the half of Crown it does not own for $1.85 billion, as well as the Modelo brewery and the brand rights.
Regulators are leery of the tie-up because AB InBev and Modelo control about 46 percent of annual U.S. sales.
Justice Department spokeswoman Gina Talamona said in a statement that the department can't comment on a specific proposal, but that it "would give any proposal serious consideration and at the same time we would continue to prepare for litigation."
Anheuser-Busch was purchased by Belgium's InBev in 2008. The combined company is already the world's biggest brewer and makes Budweiser, Beck's and Stella Artois, among others.
Last month the Justice Department filed a lawsuit to block the deal, saying that one company controlling nearly half of all U.S. beer sales would stifle competition and increase prices.
On Thursday, AB Inbev said the sale of the brewery which supplies the domestic market would give Crown total control over supply.
"We believe this revised agreement addresses all of the concerns raised by the U.S. Department of Justice in its lawsuit, leaving no doubt about Constellation's Crown beer division's complete independence and ability to compete," InBev said in a statement released Thursday.
U.S.-traded shares of AB InBev rose $4.50, or 5.1 percent, to close at $92.76 Thursday, while Constellation's stock ended up $11.87, or 37 percent, at $43.75, its highest close in at least two decades.
(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
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