Wednesday, March 10, 2010

A Corona for the King of Beers? AB-InBev Might Buy Mexican Beer Giant Grupo Modelo

Posted By on Wed, Mar 10, 2010 at 7:00 AM

click to enlarge God save the King. - IMAGE VIA
If the latest business rumors are true, the makers of the King of Beers might own a new crown jewel by the end of the year.

According to Reuters, AB-InBev is in talks to buy out the Mexican mega-brewer Grupo Modelo, makers of Negra Modelo, Pacifico, and Corona Extra.

(In case you spend more time squeezing limes than speaking Español, Corona is the Spanish word for crown.)

AB-InBev already owns 50.2 percent of Modelo and is reportedly planning to purchase the other half of the company for an estimated $10.8 billion.

Via the St. Louis Business Journal:
"We believe that a deal is likely to be announced this year," analyst Andrew Holland said in a note Tuesday. "We believe that a Modelo acquisition would provide a catalyst for outperformance."

Heineken's $7.7 billion deal to buy the beer operations of Femsa, the maker of Dos Equis, has prompted many beer industry observers to speculate over whether that would push Modelo further into A-B InBev's arms. The strengthened competition from Femsa and Heineken could finally convince Modelo shareholders to drop their resistance to what many analysts expect will become inevitable -- a complete sellout to A-B InBev.
Modelo controls 63 percent of the Mexican beer market and has exclusive rights to import and distribute A-B products in that country.

No word if AB-InBev plans to make an artificially lime-flavored Corona to save Mexicans and gringos the hassle of adding actual lime wedges to their beers.

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