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US: Anheuser-Busch InBev, Modelo deal to get DoJ go-ahead - analyst

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Anheuser-Busch InBev's concessions over its Grupo Modelo acquisition means it is now likely to get the green light from US regulators, according to an analyst.

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In a note yesterday (14 February), Stifel analyst Mark Swartzberg said: "We expect the Department of Justice (DoJ) to approve the transaction as it is aggressive, was motivated by the DoJ's objections, and, in our opinion, satisfies them by making Crown a truly independent competitor of A-B InBev in the US." It came after A-B InBev announced this week that it will sell the perpetual rights to Modelo's products in the US and the Mexican group's Piedras Negras brewery to Constellation Brands for US$2.9bn.

The concessions came after the DoJ filed an anti-trust lawsuit over the $20.1bn deal.

However, Swartzberg noted that brewing is a "new line of business" for Constellation and Crown Imports management and carries "execution risk". But he added: "Nine times EBITDA is the low end of brewer multiples, suggesting this business still has a positive present value, or is potentially additive to $45 per share, all else being equal."

For just-drinks' take on the latest developments, click here.


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