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Modelo Lured by AB InBev's Size as Beer Industry Consolidates

Wall Street Journal - Jun 29, 2012

The chief executive of Mexican brewer Grupo Modelo SAB (GMODELO.MX) said Friday that his company just couldn't pass on the opportunity to be fully integrated with the biggest and strongest beer maker in the world.

By selling to Anheuser-Busch InBev NV (BUD) the 50% of Modelo that AB InBev didn't already own, in a deal valued at $20.1 billion, Modelo is firmly positioning itself as a "world leader" amid further beer industry consolidation, Carlos Fernandez told reporters during a conference call.

AB InBev chief executive Carlos Brito, also on the call, described the combination as a "natural next step" for the two companies, saying that together they will be able to accomplish much more than they would as separate entities.

Corona brewer Modelo partnered with Anheuser-Busch more than 20 years ago. AB InBev absorbed Anheuser-Busch's 50% Modelo stake through InBev's $52 billion acquisition in 2008 of Budweiser producer Anheuser-Busch, a deal that created the world's largest beer maker by sales.

A fully combined AB InBev-Modelo would generate estimated annual sales of 400 million hectoliters for revenue of $47 billion in 2012, the companies said. The deal will also bring cost savings worth at least $600 million a year.

Read Full Article from Wall Street Journal

- Posted: 2012-06-29 13:09:24

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