Confirming media speculation, Belgian brewer Anheuser-Busch InBev NV/SA (BUD: Quote,AHBIF.PK) said Monday it is in talks to buy the remainder of Mexican brewer Grupo Modelo S.A.B. de C.V. (GPMCY.PK), owner of the Corona Extra beer. A deal would enable AB InBev to access the Mexican beer market.
AB InBev, which already has a 50.4 percent non-controlling stake in Modelo, said that the talks may or may not lead to a transaction, and any speculation on terms and conditions is therefore premature.
AB InBev said in a statement, "There is a long history of partnership between Anheuser-Busch InBev and Grupo Modelo and AB InBev has great admiration for the Modelo business and its brands."
AB InBev, the world's largest brewer, acquired the 50 percent stake in Modelo through InBev's 2008 purchase of Anheuser-Busch for $52 billion. That deal also gave AB InBev nine seats on Modelo's board after the Mexican brewer lost in its effort to deny seats.
Earlier on Monday, media reports said that AB InBev is nearing a deal to buy the remainder of Modelo for over $12 billion.
Modelo, founded in 1925, has a market value of $23 billion. It is Mexico's biggest beer brewer and the world's sixth largest, with a total annual installed capacity of 70 million hectoliters. The company's export brands include Corona Light, Negra Modelo, Pacífico and Victoria.
Modelo is the importer of AB InBev's products in Mexico, including Budweiser, Bud Light and O'Doul's. The company also imports the Chinese Tsingtao brand and the Danish beer Carlsberg.
Modelo has managed to expand its business in the U.S. and in some other countries without using the distribution network of AB InBev. Modelo has a marketing joint venture with Constellation Brands Inc. (STZ: Quote) in the U.S.
AB InBev is the result of a series of takeovers. Its brands include Beck's, Bass, Labatt Blue and Stella Artois.
European brewers have been focusing on acquisitions to expand in overseas markets as the economic crisis, austerity measures and unemployment retard growth domestically.
In April, AB InBev agreed to buy Cerveceria Nacional Dominicana for $2.5 billion. SAB Miller Plc. (SAB) last year bought Australia's Foster's for around $10 billion. In 2010, Heineken N.V. bought Mexico's Femsa Cerveza for around $7 billion.
BUD closed Monday's trading at $70.85,up $0.56 or 0.80 percent on a volume of 2.26 million shares. GPMCY.PK closed trading at $83.89, up $15.38 or 22.45 percent on a volume of 18,802 shares.
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by RTT Staff Writer
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