Early this morning Anheuser-Busch InBev announced it is acquiring the rest of Mexican brewer Grupo Modelo, the makers of Corona beer and the biggest brewer in Mexico, for a deal valued at more than $20 billion. A-B InBev has owned 50 percent stake in the brewer since the late 90s and in this deal will buy the remaining stock.
This deal unites the No. 1 and No. 3 biggest-selling brewers in the U.S., which will give A-B InBev more than 50 percent of the nation's beer market. Analysts have argued that share may prove too much for anti-trust regulators, who could force A-B to import Corona and other Model beers through a third party or sell off some of the smaller brands, possibly, according to Berstein Research writer Trevor Sterling, Busch, Natural, or Michelob. However, Grupo Modelo also announced today that it will sell its 50 percent stake in Crown Imports to its partner Constellation Brands. Modelo hopes the Crown divestiture will solve any anti-trust concerns about the A-B InBev acquisition
JPMorgan analyst Mike Gibbs estimates that Modelo would boost the giant brewer's earnings per share by 7 percent next year. A-B InBev said it expects the combination to yield annual synergies of at least $600 million, and the combined company will produce roughly 400 million hectoliters (or 40 billion liters) of beer volume annually and 2012 estimated revenue of $47 billion.
Now sold mainly in the U.S. and Mexico, A-B InBev said it will expand Corona with a goal of making it a global flagship brand alongside Budweiser, Stella Artois, and Beck's.
