The US Department of Justice (DoJ) has dropped its case seeking to block Anheuser-Busch InBev’s (AB InBev) proposed acquisition of the remaining shares in Grupo Modelo (Modelo) that it does not already own (blogged about in these previous posts: 1, 2 and 3). The DoJ dropped its case pursuant to reaching a final settlement agreement on 19 April 2013 with AB InBev, Modelo, Constellation Brands (Constellation) and Crown Imports LLC (Crown).
According to the DoJ, Modelo places competitive pricing pressure on AB InBev and SAB Miller (AB InBev’s largest competitor) so it was concerned that the deal would lead to higher prices for US beer drinkers if that priicing pressure was removed. In order to alleviate these concerns, the original deal has been altered to include a package of divestiture remedies. Upon completion of the deal, Constellation will buy from AB InBev:
- a major Modelo brewery and bottling facility in Piedras Negras, Mexico (under the settlement agreement, Constellation has also agreed to expand the capacity of this facility);
- exclusive and perpetual licenses of all of Modelo brand beers sold in the US (including Corona, Corona Light, Modelo Especial and Pacifico); and
- its stake in Crown that it does not already own.
The deal has now cleared all of its regulatory hurdles and once the US District Court in Washington DC approves the settlement, the deal will close, which is anticipated to occur in June this year.