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