Divestiture Seen Rescuing AB-Modelo Deal

Anheuser-Busch InBev (AB InBev) has agreed to sell a Mexican brewery and control of the Corona brand in the US to Constellation Brands for $2.9bn, it says, a move analysts see saving AB InBev’s $20bn deal agreed last year to buy the remainder of Mexico’s Grupo Modelo. In order to appease US regulators, Constellation will take the Piedras Negras brewery and perpetual rights to Corona and the other Modelo beer brands in the US. The price implies a multiple of 9x the expected 2012 Ebitda of $310m, AB InBev says. “This move addresses the [US Department of Justice] concerns surrounding the ABI-Modelo deal as ABI has effectively no involvement or influence over any aspect of the Corona and Modelo brands in the US,” Jefferies says in a note, adding that it now expects the Modelo deal to conclude successfully. The shop calls the multiple “fair.” AB InBev still plans to sell Modelo’s 50% stake in beer importer Crown Imports to Constellation for $1.85bn, as agreed last year. The brewer notes that it now sees $1bn in revenue and cost benefits coming from the Modelo deal, higher than the $600m it had originally expected. In July last year AB InBev agreed to buy the 50% of Modelo it did not own for $20.1bn. The US Department of Justice sued to block the deal in January, on concern that AB InBev would control an unfair portion of the US beer market.