US: Constellation Brands requests role in DoJ Modelo battle

By | 8 February 2013

Constellation Brands wants a hand in its destiny as Anheuser-Busch InBevs Grupo Modelo buy is being questioned by the Department of Justice

Constellation Brands wants a hand in its destiny as Anheuser-Busch InBev's Grupo Modelo buy is being questioned by the Department of Justice

Constellation Brands has requested to be part of the US legal case aimed at blocking Anheuser-Busch InBev's proposed takeover of Grupo Modelo.

The US drinks company, which jointly controls Modelo's US import operations with the Mexican brewer, saw its share price plummet last week when the Department of Justice (DoJ) filed a lawsuit against A-B InBev. The global brewer has been accused by the DoJ of breaching anti-trust guidelines in the US, when it agreed to buy the remaining stake in Modelo that it does not already own.

In its legal motion today (8 February), Constellation has requested that its interests and those of the US JV, Crown Imports, "are represented as part of the US DOJ's complaint against the proposed A-B InBev acquisition of Modelo".

When A-B InBev announced its plan to buy Modelo, in June, Constellation was lined up to buy the Mexican firm out of the JV for US$1.85bn.

"The (DoJ) complaint directly impacts both companies (Constellation and Crown)", Constellation said. "This motion will seek to permit Constellation and Crown to have direct access to the legal proceedings."

Constellation used the announcement to reiterate the points it made in favour of the transaction last week.

A-B InBev followed Constellation's move with a statement today stating that it has filed a memorandum supporting Constellation's motion.

The DoJ lawsuit has been filed with the US District Court for the District of Columbia.

Expert analysis

Grupo Modelo S.A.B. de C.V. (GMODELOC) - Financial and Strategic SWOT Analysis Review

Grupo Modelo S.A.B. de C.V. (Grupo Modelo principally engages in brewing and sale of beer, stout, ale, lager, and lambic in Mexico. The company operates eight breweries and has a total annual installed capacity of 70 million hectoliters. It brews and distributes beer under 13 brands, including Corona Extra, Modelo Especial, Victoria, Pacifico, and Negra Modelo. The company exports six brands of beer and has presence across 180 countries such as Australia, Denmark, Greece, Ireland, Malaysia, Mexico, Norway, Singapore, Spain, Sweden, Taiwan, United Kingdom, and United States among others. The company, in alliance with Nestle Waters, engages in the production and distribution of bottled water brands such as Santa Maria, Nestle Pureza Vital and others, in Mexico. In addition, it imports the Anheuser-Busch InBev's products such as Budweiser, Bud Light and O'Doul's, as well as the Chinese Tsingtao brand and the Danish beer Carlsberg. Grupo Modelo S.A.B. de C.V. is headquartered at Mexico City, Mexico. In recent past, Anheuser Busch Inbev SA company anounced to acquire the remaining stake in Grupo Modelo S.A.B. de C.V., this step is taken to secure a leading position in the mexican domestic beer market.

Sectors: Beer & cider, Mergers & acquisitions

Companies: Modelo, Constellation, InBev

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