Anheuser-Busch InBev Confirms Interest in Grupo Modelo
Settling industry rumors, Anheuser-Busch InBev (AB InBev) noted this week that there is truth to the recent speculation regarding a possible combination between AB InBev and Grupo Modelo.
A statement from the company reveals, "AB InBev routinely considers a variety of strategic options to create value for its shareholders. There have been discussions between the company and Grupo Modelo regarding a possible transaction to expand its current relationship. These discussions may or may not lead to a transaction and any speculation on terms and conditions is therefore premature. There is a long history of partnership between Anheuser-Busch InBev and Grupo Modelo and AB InBev has great admiration for the Modelo business and its brands."
Commenting on the possible $20 billion deal, Kaumil S. Gajrawala, managing director, US Beverages, UBS Investment Bank, says, "We see Modelo as a “classic” ABI deal — a market leader in Mexico with cost savings potential. We believe Mexican EBIT margins could rise from 28 percent to 35 percent. Mexican beer market should grow volume at 3 percent pa mid-term, with premiumization potential. However, the market’s exclusivity structure is some constraint on margin expansion. We see control of Corona in the U.S. as ABI’s ambition, though a potential buy out of STZ from Crown and anti-trust would remain issues."
A statement from the company reveals, "AB InBev routinely considers a variety of strategic options to create value for its shareholders. There have been discussions between the company and Grupo Modelo regarding a possible transaction to expand its current relationship. These discussions may or may not lead to a transaction and any speculation on terms and conditions is therefore premature. There is a long history of partnership between Anheuser-Busch InBev and Grupo Modelo and AB InBev has great admiration for the Modelo business and its brands."
Commenting on the possible $20 billion deal, Kaumil S. Gajrawala, managing director, US Beverages, UBS Investment Bank, says, "We see Modelo as a “classic” ABI deal — a market leader in Mexico with cost savings potential. We believe Mexican EBIT margins could rise from 28 percent to 35 percent. Mexican beer market should grow volume at 3 percent pa mid-term, with premiumization potential. However, the market’s exclusivity structure is some constraint on margin expansion. We see control of Corona in the U.S. as ABI’s ambition, though a potential buy out of STZ from Crown and anti-trust would remain issues."