Carlos Brito is confident the Modelo deal will get regulatory approval, despite concerns

Carlos Brito is confident the Modelo deal will get regulatory approval, despite concerns

The CEO of Anheuser-Busch InBev has rejected concerns that its deal to buy Grupo Modelo could be scuppered by US competition authorities, arguing that it will bring "no change" to the country's beer market.

On an investor conference call on Friday (29 June), following news of A-B InBev's deal to buy Grupo Modelo for US$20.1bn, Carlos Brito said that the company "believes this transaction should be approved". As part of its agreement to buy Modelo, A-B InBev announced the Mexican brewer would sell its 50% share in Crown Imports, exclusive importer of Modelo brands to the US, to Constellation Brands

But, analysts Bernstein Research proffered this move "may not be enough" to placate the regulatory authorities. 

Brito, who admitted the company had not consulted the US authorities prior to announcing the deal, added: "We believe this transaction brings no change to the US market. Constellation will own 100% of Crown in the US (after the sale) and Crown will remain the sole importer of Grupo Modelo brands into the US market." 

Asked to explain why Modelo was selling its interest in Crown, Brito said: "Before this transaction was announced, A-B and then A-B InBev had no insight into Grupo Modelo's business in the US through their agreement with Crown.

"And it's our intention to continue that position of having no insights into Grupo Modelo's brand business in the US through Crown." 

A-B InBev said it would also have to get regulatory approval from countries other than the US and Mexico before the deal is expected to complete in the first quarter of 2013. However, Brito would not be drawn on where these other jurisdictions might be.

Looking at where Modelo's flagship brand, Corona, might prosper globally, A-B InBev's CEO said it had a "promising future in China". But he pointed out it will come from a much lower base than Budweiser, which currently has a 42% share of the premium segment in China. 

Modelo's CEO, Carlos Fernandez, concluded by saying:  "I'm very excited about this combination and the possibilities we have going forward and evidently I'm excited to see where Grupo Modelo can go, partnering with A-B and with your leadership Carlos."