Shares of beverage makers Constellation Brands (STZ) and Anheuser-Busch InBev (BUD) are both sharply lower after the Department of Justice sued to block AB InBev's proposed purchase of Grupo Modelo. In June of last year, Constellation Brands announced that it agreed to purchase the remaining 50% interest in the Crown Imports joint venture that it runs with Grupo Modelo in conjunction with AB InBev completing its proposed acquisition of Modelo. Constellation agreed to a purchase price of $1.85B for the 50% stake in Crown Imports and said that under the terms of the transaction, Constellation and Crown will have complete, independent control of distribution, marketing and pricing for all Modelo brands in the U.S., while AB InBev will ensure continuity of supply and quality of products. Constellation also said at the time of the announcement that the Crown transaction was expected to be significantly accretive to Constellation's on-going diluted earnings and free cash flow results. Following the announcement of the DOJ's lawsuit, Constellation shares are down $8.08, or 20.63%, to $31.09, while Anheuser-Busch InBev is down 4.9% to $89.52.
- Mergers, Acquisitions & Takeovers
- Constellation Brands
- Grupo Modelo
- AB InBev