Anheuser- Busch InBev, one of the world’s largest brewers, may expand even further if a proposed deal becomes reality.
Mexican brewer Grupo Modelo, the company that produces top- selling Corona Extra, has been in talks with Anheuser- Busch InBev and is near completion of a buyout deal. The cost of the deal would be in the neighborhood of $12 billion and it would involve the transference of complete control of Grupo Modelo over to Anheuser- Busch InBev.
Anheuser- Busch InBev’s involvement with Grupo Modelo has been ongoing for some time. After all, the Belgium- based beer giant already owns 50% of Grupo Modelo stock, so a complete buyout would involve only half of the overall common shares. Followers of the Anheuser- Busch InBev/ Grupo Modelo saga may also recall that Anheuser- Busch was once in negotiations with Grupo Modelo back before InBev took over Anheuser- Busch. The idea was that a merger of the two would create a company too large for InBev to buy, but no deal ever transpired.
Most industry analysts agree that the buyout makes good financial sense, but that doesn’t mean the deal will go through as planned. The two businesses have been in this situation before and failed to finalize an agreement. And there have been some tensions on both sides. Back in 2008, Grupo Modelo went to court wuth Anheuser- Busch InBev, claiming that the merger between A-B and InBev violated Grupo Modelo’s contract. Anti- trust and other concerns have already surfaced and tension is often in the air whenever the suggestion of merger talks begins.
What does a merger like this mean for beer drinkers? Well, it means that Grupo Modelo will have the full backing of a huge beverage company with a large amount of cash, dustribution channels, and influence. Grupo Modelo’s popular products such as Corona Extra, Corona Light, Pacifico, Victoria, Negra Modelo, and Modelo Especial are already exported to the United States, Canada, and the United Kingdom. With Anheuser- Busch InBev in many more countries, it would open the world market to even greater exposure for these and other core brands.
Anheuser- Busch InBev and Grupo Modelo haven’t finalized anything yet, so investors and others shouldn’t hold their breath. Deals between the two have fallen through before, but considering present circumstances and the economic climate, the buyout has a better chance for success this time around and it could be finalized in a matter of days.