AB InBev and Corona maker Modelo take over for $20.1bn

AB InBev and Corona maker Modelo take over for $20.1bn : The world's biggest brewer, Anheuser-Busch InBev, has widened the gap on its rivals after swallowing the maker of Corona, Grupo Modelo, for $20.1bn (£12.9bn).

Budweiser-owner AB InBev has bought the 50pc stake in Mexico's Grupo Modelo it didn't already own.

Comment: 

The deal is the second biggest global merger or acquisition announced so far this year, behind the proposed $60bn tie-up between commodity giant Glencore and miner Xstrata.

It also follows a string of deals by major drinks companies in fast-growth emerging markets over the last few years.

InBev is buying the remaining 50pc stake it doesn’t already own in Modelo, which is the world’s seventh biggest beer company and the market leader in Mexico ahead of Heineken.

It is estimated the combined group would produced about 400m hectolitres of beer annually and would reach sales of about $47bn - opening a chasm between InBev and its nearest rival SABMiller, whose total beverage production, including soft drinks, hit 286m hectolitres last year.

The agreed price of $9.15 a share represents a 30pc premium to Modelo’s share price on 22 June, surprising some analysts.

Previously the cost of a full takeover had been estimated at about $12bn and concerns over the final price tag put some pressure on InBev’s shares in early trading in Belgium.

Gerard Rijk, analyst with ING, said the agreed price was “disappointing”.

“The deal is at the high end of the expected price range,” he added in a note.

InBev, the owner of Budweiser, Beck’s and Stella Artois, has previously been linked to a potential takeover of FTSE heavyweight SABMiller in a bid to gain access to burgeoning beer markets in Africa.

Mexico’s beer market is the seventh most lucrative in the world and growth is estimated at about 3pc a year. The market is dominated by a duopoly between Modelo and Heineken which bought Mexico’s second biggest brewer, Femsa, in 2010.

InBev inherited its existing stake in 87-year-old Modelo in 2008 when it splashed $58bn on Anheuser-Busch.

The two companies had a strained relationship for several years after the founding families that controlled Modelo sought to block its inclusion in the takeover of Anheuser-Busch with InBev.
InBev said on Friday that it expected the deal to result in $600m of synergies, higher than the $250m mooted by analysts.

“There is tremendous opportunity from combining two leading brand portfolios and further expanding Grupo Modelo’s brands worldwide through AB InBev’s extensive global distribution network,” said Carlos Brito, chief executive of AB InBev.

The prospect of a full takeover of Modelo, which distributes its brands in the US through a joint venture with Constellation, had raised some concerns over competition. Coroner Extra is the biggest imported beer in the US, where InBev already dominates almost half of the market.

But Modelo said it had agreed to sell its 50pc stake in the JV, Crown Imports, to Constellation for $1.85bn. Constellation will continue to distribute Modelo’s brands in the America.

The Modelo deal, which is InBev’s biggest purchase since its 2008 takeover of Anheuser-Busch, follows a number of other deals by major brewers as they look to consolidate market share in fast growth emerging markets.

In the last 12 months, InBev has bought the Dominican Republic’s Cerveceria Nacional Dominicana for more than $1.2bn, Molson Coors snapped up Eastern European brewer StarBev for $2.65bn while SABMiller swooped on Foster’s in Australia for $11.8bn.

InBev was advised on the Modelo deal by Lazard.

Source:http://www.telegraph.co.uk