Beer Wars Escalate - Anheuser Busch InBev Seeks Modelo Acquisition

By Adam Mysorewala | June 25, 2012 | 0 Comments |
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Today, talks of Anheuser Busch InBev’s  (AB InBev) potential buyout of fellow brewing giant, Grupo Modelo, became public. The deal is rumored to be somewhere between $12-$15 billion and would make AB InBev, the world’s largest brewer, even bigger. The acquisition would not only provide AB InBev access to the growing Mexican beer market, but would also give the mega-brewery distribution rights to the Corona brand, the largest U.S. beer import.

While talks of the enormous buyout have been confirmed, there is still a very real possibility that the deal may fall through. The main issue keeping Modelo stakeholders from accepting the offer is price. One source said, "The families are willing to sell but they want a big price as they see a big boost for AB InBev from owning 100 percent of Modelo.” However, AB InBev believes the asking price is too high, as the company already holds a 50% stake in Modelo.

Still, it’s hard to argue that the buyout would not help AB InBev enormously. Acquiring Grupo Modelo would give AB InBev access to the world’s sixth largest and fourth most profitable beer market—Mexico. It would also give AB InBev the rights to six of the top twenty U.S. beer imports (For more check out Modelo Now Has Six Brands In The Top 20 Imports). In fact, the buyout would give AB InBev six of the Top 10 Beer Brands in the world. This is especially beneficial to AB InBev because of its desire to increase focus on Latin and North American markets, which already account for over 90% of profits. However, the acquisition of Corona could have some negative repercussions, as AB InBev may have to deal with antitrust authorities because of it’s potential monopoly on U.S. beer.

While this deal may sound promising, nothing is final and talks have continued throughout Monday morning. Grupo Modelo officials warned the public that discussions might not result in a deal. AB InBev had similar sentiments saying that speculation is “premature”.

Whether or not the deal happens, one this is for sure: big beer is getting bigger—we’ve seen it before and talks of this buyout aren’t much of a surprise to any of us. Just two months ago, AB InBev decided to buy Dominican Republic's Cerveceria Nacional Dominicana for $1.2 billion (For more on this check out Here We Grow Again: Anheuser Busch InBev Acquires Dominican Brewer). And before that? How about SABMiller’s $12 billion purchase of Fosters? The Modelo buyout would just be the latest in a series of acquisitions rooted in big beer’s search for growth in emerging markets and a larger world market share.

Your Choice. Your Beer. Drink Up.
- Beer Universe



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