AB InBev in talks to buy Mexico's Modelo

Mon Jun 25, 2012 5:27pm EDT
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By Philip Blenkinsop and David Jones

BRUSSELS/LONDON (Reuters) - Anheuser-Busch InBev SA's (ABI.BR: Quote) interest in buying the rest of Mexico's Grupo Modelo GMODELOC.MX on Monday warmed investors eager to see fresh consolidation in the global beer market.

Shares of both brewing giants rose after Modelo and Belgian-based AB InBev, which has a 50.4 percent noncontrolling stake in the Mexican company, said on Monday they are discussing expanding their joint relationship.

Fueled by Mexico's growing beer market, AB InBev could unlock big cost savings and give the company control of exports of Corona beer, the No. 1 imported brand in the United States.

The deal, which would follow a series of recent mergers in the industry, could be worth well over $10 billon, though the family-controlled Mexican brewer said nothing was set in stone.

"These talks may or may not result in the consummation of a deal and any speculation on the terms and conditions is premature," Modelo said in a statement.

An agreement would give Anheuser-Busch InBev, the world's largest brewer, access to the Mexican beer market which is growing by 2 to 3 percent a year.

Mexico is the world's sixth-biggest beer market and the fourth-most profitable, and is a virtual duopoly between No. 1 player Modelo and Heineken (HEIN.AS: Quote).

In terms of volume, Modelo is the world's seventh-biggest brewer, according to independent researcher Plato Logic.   Continued...

View of Anheuser-Busch InBev logo outside the brewery headquarters in Leuven June 25, 2012. Anheuser-Busch InBev, the world's biggest brewer and maker of Budweiser and Stella Artois beers, is in talks to buy the 50 percent of Corona beer maker Grupo Modelo that it does not already own, said a person familiar with the matter - in a potential deal that could top $10 billion. REUTERS/Francois Lenoir