Anheuser-Busch and Grupo Modelo Settle Merger Challenge

On April 22, 2013, the U.S. District Court for the District of Columbia approved Anheuser-Busch’s and Grupo Modelo’s settlement with the U.S. Department of Justice, resolving the Department’s antitrust lawsuit that threatened to prohibit Anheuser-Busch’s multibillion-dollar acquisition of its competitor, Grupo Modelo. The Justice Department filed its lawsuit in January, claiming that the $20.1 billion acquisition would give Anheuser-Busch control of nearly 50 percent of the U.S. beer market, lessen competition and result in higher beer prices for consumers. The settlement requires Anheuser-Busch and Modelo to divest Modelo’s entire U.S. business to Constellation Brands, Inc., one of the country’s largest wine producers.

Specifically, the divestiture will include the Piedras Negras brewery, Modelo’s newest and most technologically advanced brewery, as well as perpetual and exclusive licenses to Modelo brand beers for distribution and sale in the United States. The divestiture will also include Modelo’s current interest in Crown Imports LLC, a joint venture established by Modelo and premium wine company Constellation Brands to import, market, and sell certain Modelo beers in the United States, as well as other assets, rights, and interests necessary to ensure that Constellation will be able to compete in the U.S. beer market using Modelo brand beers, independent of any relationship to Anheuser-Busch and Modelo. Constellation is paying roughly $4.75 billion for the Modelo assets—$2.9 billion for the control of the beer brands in the United States and $1.85 billion for the full control of Crown.

As a result of the deal, Anheuser-Busch will complete its acquisition of Modelo in June 2013, and Constellation will be left with full and permanent rights to make and sell Corona, Corona Light, Modelo Especial, Pacifico, and six other beer brands in the United States. A copy of stipulation and order can be found here.