News

US: Constellation Brands comes out fighting against lawsuit

Most popular

Should Pernod dump wine, bunk up with Brown-Forman

What will be Ian Curle's Edrington legacy?

Why Brown-Forman will be one of spirits' winners

Interview, Pernod Ricard CEO Alex Ricard - Part I

MORE

Constellation Brands has accused the US Department of Justice of having an “incomplete understanding” of Anheuser-Busch InBev's proposed takeover of Mexico's Grupo Modelo.

//i2.aroq.com/1/logo2.jpg

Yesterday (31 January), the Department of Justice (DoJ) filed a lawsuit against A-B InBev over the latter's intention to buy the half of Grupo Modelo that it does not already own. The purchase, announced in June, would see Constellation take full control of Crown Imports, the US sales and distribution JV it operates with Modelo.

Following the announcement of the lawsuit, Constellation's share price plunged by around 20%.

Having issued a short statement late yesterday, in which it said it was “disappointed” at the latest development, Constellation went further today, claiming that the DoJ has “demonstrated its incomplete understanding of the proposed transaction”.

The first of the three reasons Constellation gives in the attack is that it is Crown Imports that is A-B InBev's competitor in the US, rather than Modelo. “It is surprising that the DoJ has over-looked the existence and commercial activities of this … autonomous business,” said Constellation's president and CEO, Rob Sands.

Secondly, Constellation argues, its takeover of Crown would “improve competition”, with the division having “complete, autonomous control as the brand owner in the US with respect to its distribution, marketing, promotion and pricing of Corona and the other Modelo brands”.

Finally, the move would afford Crown “even greater flexibility” to respond to “competitive factors” in each of its markets. “The new contract ensures that Crown will benefit from both long-term stability in costs of goods provided by A-B InBev, and from the … global scale of the world’s leading beer producer,” said Constellation. The unit would also be in a position to “supplement its offerings in the US beyond the Modelo portfolio” should it wish to.

Several analysts posited today that A-B InBev's move for Modelo, and Constellation's subsequent takeover of Crown, will likely proceed, with A-B InBev making concessions to satisfy the DoJ.


Related Content

Constellation Brands to buy Mexico brewery from Anheuser-Busch InBev

Constellation Brands to buy Mexico brewery from Anheuser-Busch InBev...

Constellation Brands' Q3 & YTD 2018 results - Preview

Constellation Brands' Q3 & YTD 2018 results - Preview...

The danger to craft from US wholesaler consolidation - Analysis

The danger to craft from US wholesaler consolidation - Analysis...

Is there US trouble ahead for Constellation Brands' Mexican beers? - Analysis

Is there US trouble ahead for Constellation Brands' Mexican beers? - Analysis...

Oops! This article is copy protected.

Why can’t I copy the text on this page?

The ability to copy articles is specially reserved for people who are part of a group membership.

How do I become a group member?

To find out how you and your team can copy and share articles and save money as part of a group membership call Sean Clinton on
+44 (0)1527 573 736 or complete this form..



Forgot your password?