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Beerworkers Archive


Post date: 02/14/2013 - 22:49

This may be Finally Over

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The terms of our original combination announced on June 29, 2012, to acquire the remaining stake in Grupo Modelo that we don’t already own, remain unchanged. As you know, for AB InBev, the combination with Grupo Modelo has always been about Mexico and making Corona more global in all markets other than the U.S. We continue to be committed to this transaction and remain excited about the strong merits of combining two world-class companies

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The terms of our original combination announced on June 29, 2012, to acquire the remaining stake in Grupo Modelo that we don’t already own, remain unchanged. As you know, for AB InBev, the combination with Grupo Modelo has always been about Mexico and making Corona more global in all markets other than the U.S. We continue to be committed to this transaction and remain excited about the strong merits of combining two world-class companies

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We also announced in June that Grupo Modelo agreed to sell its existing 50% stake in Crown, the joint venture that imports and markets Modelo’s brands in the U.S., to Constellation, for 1.85 billion USD, giving Constellation 100% ownership and control.

Earlier today we announced a revised agreement with Constellation to sell Grupo Modelo’s brewery in Piedras Negras, Mexico to Constellation and grant them perpetual rights for Grupo Modelo’s brands distributed by Crown in the U.S for 2.9 billion USD. The sale of the brewery, which is located near the Texas border, would ensure independence of supply for Crown and complete control of the production of Grupo Modelo’s brands distributed by Crown in the U.S. In addition, under the June agreement, AB InBev had the right, exercisable every ten years, to terminate the importer agreement with Crown. That provision has been removed in the revised agreement.

In short, we would completely divest the U.S. business of Grupo Modelo and Crown would continue to be an independent competitor in the U.S., gaining all of the responsibilities of a brewer. AB InBev intends to work with Constellation over the next three years to ensure a smooth operational transition in Piedras Negras for workers and suppliers.

We believe this revised agreement with Constellation addresses all of the concerns raised by the U.S. Department of Justice in its recent lawsuit challenging the proposed combination and allows us to move expeditiously to the Modelo integration process and the capture of approximately USD 1 billion of synergies, up from our original estimate of USD 600 million.

Please note that while we have reached a revised agreement with Constellation, it remains conditioned on the completion of the Grupo Modelo transaction, as well as regulatory approvals in the U.S. and Mexico and other customary closing conditions. Until closing, it will be business as usual.

We will keep you informed as new developments arise. As usual, please stay focused on your responsibilities. Thank you for your continued hard work and commitment to AB InBev.