Belgian brewer Anheuser-Busch InBev NV/SA (BUD: Quote,AHBIF.PK) has reached an agreement to acquire the remaining stake in Mexican peer Grupo Modelo S.A.B. de C.V. (GPMCY) by paying the Corona beer maker $9.15 per share in cash or about $20.1 billion.
AB InBev, the world's largest brewer, acquired a 50 percent stake in Modelo through InBev's 2008 purchase of Anheuser-Busch for $52 billion.
Carlos Brito, CEO of AB InBev, said, "Grupo Modelo has been one of our most important partners for more than 20 years...There is tremendous opportunity from combining two leading brand portfolios and further expanding Grupo Modelo's brands worldwide through AB InBev's extensive global distribution network.''
Modelo, founded in 1925, 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.
In a statement Friday, AB InBev said the combination would be completed through a series of steps that would simplify Grupo Modelo's corporate structure, followed by an all-cash tender offer by AB InBev for all outstanding Grupo Modelo shares.
The tender price represents a premium of around 30 percent to the closing price of Grupo Modelo series C shares on June 22, the last trading day before reports emerged about the combination.
The combination is expected to yield annual synergies of at least $600 million. The transaction is expected to close during the first quarter of 2013.
The combined company would lead the global beer industry with 400 million hectoliters of beer volume annually and estimated revenues of $47 billion in 2012. It will have operations in 24 countries with enhanced opportunities for 150,000 employees globally.
The deal will bring together five of the top six and seven of the top ten most valuable beer brands in the world. It will further enhance AB InBev's exposure to fast-growing developing markets. Both companies' Boards have approved the deal.
Grupo Modelo's name, identity, heritage and headquarters in Mexico City will be maintained. The company will continue to have a local board. Its chairman and CEO Carlos Fernández, María Asunción Aramburuzabala and Valentín Díez Morodo will continue to play a key role on the firm's Board of Directors.
Two Grupo Modelo board members will join AB InBev's Board of Directors. They have committed, upon tender of their shares, to invest $1.5 billion of their proceeds from the tender offer into shares of AB InBev, which will be delivered within five years via a deferred share instrument.
AB InBev has fully committed financing for the purchase. The company has added $14 billion of additional bank facilities to existing liquidity through a new facility agreement.
In a related transaction, Grupo Modelo will sell its existing 50 percent stake in Crown Imports - the joint venture that imports and markets Grupo Modelo's brands in the U.S. - to Constellation Brands (STZ) for $1.85 billion, giving Constellation Brands 100 percent ownership and control.
As a result, Grupo Modelo's brands will continue to be imported, marketed and distributed independently in the U.S. through Crown Imports. Crown Imports will continue to manage all aspects of the business.
European brewers are focusing on acquisitions to expand in overseas markets as the economic crisis, austerity measures and unemployment rates have retarded 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.
AB InBev is currently trading in Brussels at 58.66 euros, down around 0.6 percent from the previous close.
GPMCY closed at $85.92, compared to the prior close of $83.75.
 | | To receive FREE breaking news email alerts for Anheuser-Busch InBev NV/SA and others in your portfolio |
|
by RTT Staff Writer
For comments and feedback: editorial@rttnews.com
Business News