Comment - Is Grupo Modelo About to Give In to Anheuser-Busch InBev?

By James Wilmore | 25 June 2012

A fresh round of speculation has kicked off over whether Anheuser-Busch InBev will finally gets its paws on Mexican brewer Grupo Modelo.

Currently, A-B InBev has a 50% non-controlling stake in Modelo, but this could be about to change. The rumours were given credence this afternoon, when A-B InBev released a statement confirming it has been in talks with Modelo.

But it's worth reminding ourselves, there really is no love lost between these two firms. It was 2008 that Modelo's chairman & CEO, Carlos Fernandez, quit the board of Anheuser-Busch, just prior to A-B being acquired by InBev.

This was the first official sign the Mexican brewer was not going to take kindly to A-B being taken over by the Belgium-based firm. And more indicators followed.

Later that year, Modelo filed a notice of arbitration against A-B, claiming the agreement between itself and the brewer prohibited the transfer of A-B's stake to "a competitor in the beer business". The arbitration panel found in A-B's favour.

But, this was not the end of Modelo's anti-A-B actions. When, in 2010, the Mexican firm decided to switch distributors of its flagship brand Corona Extra in the UK, Channel Islands and Japan, A-B InBev would have been the obvious choice, bearing in mind the already-established links. Instead, Modelo snubbed A-B and plumped for its rival Molson Coors. The same happened in February of this year in China, this time Carlsberg got the nod.

It's clear Group Modelo's management has an in-built antipathy to the the giant that is A-B InBev. I would suggest that it has a lot to do with family pride. Fernandez is the great-nephew of one of the firm's founders, and it is unlikley he will want to see the company gobbled up.

However, perhaps relations are thawing. In an interview he gave with the Wall Street Journal last year, Fernandez was quoted as saying, in relation to A-B InBev: "We are starting to develop that relationship".

And A-B InBev has certainly shown it is not afraid to flirt with the statement released today, saying it has "great admiration for the Modelo business and its brands".

Will Carlos give in this time? Maybe the time is finally right.

Expert analysis

Grupo Modelo, S.A.B. de C.V.- Strategy and SWOT Report

Grupo Modelo, S.A.B. de C.V. - Strategy and SWOT Report, is a source of comprehensive company data and information. The report covers the company’s structure, operation, SWOT analysis, product and service offerings and corporate actions, providing a 360° view of the company.Features:- Detailed information on Grupo Modelo, S.A.B. de C.V. required for business and competitor intelligence needs- A study of the major internal and external factors affecting Grupo Modelo, S.A.B. de C.V. in the form of a SWOT analysis- An in-depth view of the business model of Grupo Modelo, S.A.B. de C.V. including a breakdown and examination of key business segments- Intelligence on Grupo Modelo, S.A.B. de C.V.’s mergers and acquisitions (M&A), strategic partnerships and alliances, capital raising, private equity transactions, and financial and legal advisors- News about Grupo Modelo, S.A.B. de C.V., such as business expansion, restructuring, and contract wins- Large number of easy-to-grasp charts and graphs that present important data and key trends

Sectors: Beer & cider, Mergers & acquisitions

Companies: Modelo, InBev, Coors, Carlsberg

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26 Jun 2012 -