Fitch says AB InBev deal with Modelo makes sense

Fitch said a possible acquisition of Grupo Modelo by Anheuser Busch InBev makes sense

Associated Press

NEW YORK (AP) -- Fitch Ratings said Monday that a possible acquisition of Mexico's Grupo Modelo by Anheuser-Busch InBev NV makes strategic and economic sense.

The Belgium-based brewer confirmed Monday that it is in talks to buy control of Mexico's largest beer maker, which makes Corona and other popular beers. Anheuser-Busch InBev already has a 50 percent stake — but not control — in Modelo.

Fitch said a potential deal would enhance the value of Anheuser-Busch InBev's existing stake in Modelo and give it a foothold in the highly-profitable Mexican market, where it does not have a presence.

Modelo already distributes many of its products in the U.S. through a joint-venture agreement with Constellation Brands Inc. If a deal is successful, the distribution agreement would end in a move to strengthen the range of products for Anheuser-Busch InBev, which is the leading beer company in the U.S.

Victor, N.Y.-based Constellation could benefit as well. Investors are betting that if a deal between Anheuser-Busch and Modelo succeeds, Modelo would have to pay a significant premium for Constellation's half of the stake in their joint venture.

The rating agency said it did not have enough information to confirm that a deal would happen but would evaluate the ratings of Anheuser-Busch InBev and Constellation Brands if a deal was certain.

Anheuser-Busch InBev shares rose 51 cents to $70.81 in afternoon trading. Shares of Constellation Brands rose $2.25, or 11.6 percent, to $21.62.

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