Anheuser-Busch InBev is acquiring the rest of Mexican brewer Grupo Modelo, the maker of Corona beer, in a deal valued at $20.1 billion, the companies announced early this morning.
A-B InBev, which already owns a 50 percent stake in Modelo, will buy the remaining stock for $9.15 per share.
Under the terms of the deal, the Mexican brewer will take a series of steps to "simplify Grupo Modelo's corporate structure," at which time A-B InBev will tender an all-cash offer for the shares, the companies said. A-B InBev said it expects the combination to yield annual synergies of at least $600 million.
Grupo Modelo's headquarters will remain in Mexico City and the company will maintain a local board of directors. The company, founded in 1925, has 37,000 employees and brews and distributes 13 brands, including Corona, Modelo Especial, Victoria, Pacifico and Negra Modelo.
A-B InBev, the world's largest brewer, has a portfolio of more than 200 brands and 116,000 employees. Combined, the two companies' annual revenue totals nearly $47 billion.
As a closely held business, Modelo is organized in a series of interlocking trusts and companies to maintain the Fernandez family's control of the business.
The tender offer is about a 30 percent premium to the closing price of Grupo Modelo's series C shares on June 22.
Grupo Modelo also announced today that it will sell its 50 percent stake in Crown Imports, the joint venture that exports and markets its Corona brands to the U.S., to its partner Constellation Brands for $1.85 billion.
By giving up control of Corona's distribution in the U.S., Modelo hopes the Crown divestiture will head off any antitrust concerns about the A-B InBev acquisition. An A-B InBev/Modelo combination would give the brewer a 53 percent market share in the U.S., and antitrust regulators could block or impose conditions on the deal.
Today's deal ends a close, but tumultuous relationship between the two brewers, which first started in 1993 when A-B bought a share of Modelo as part of a bid to expand in Mexico. By the late '90s, A-B owned half of the company's stock, and controlled nine of 19 board seats, while Modelo chief executive Carlos Fernandez sat on the A-B board.
When InBev launched its takeover bid in 2008, A-B executives saw buying the rest of Modelo as their best option to remain independent –- the so-called "Mexican defense" –- and the two companies were near a deal in which A-B would buy out Modelo and potentially install Fernandez as CEO, according to an account in Dethroning the King, a 2011 book on the InBev takeover. But it fell through, and Fernandez quit the board of A-B shortly before the deal with InBev.
Since then, "the other half" of Modelo has been widely seen as a juicy target for A-B InBev, giving the brewer brands that are dominant in Mexico, growing in the profitable U.S. market and full of potential overseas. But relations have been frosty.
In 2008, Modelo filed for arbitration against A-B selling its stake in the brewer to InBev; arbitrators ruled in A-B's favor. Meanwhile Modelo has snubbed A-B InBev's network for several overseas distribution deals, instead picking rivals MolsonCoors and Carlsberg.
In videos announcing the sale, both A-B InBev and Grupo Modelo's top executives spoke of the strength of the combined companies.
"I truly think that we can together do much more than as separate companies," said A-B InBev CEO Carlos Brito.
In a separate video, Grupo Modelo's CEO Carlos Fernandez said: "It fills me with great pride because undoubtedly, it is a testament to the dedication and talent of the great team that we have at Grupo Modelo and to many years' work and to the efforts that have built one of Mexico's most successful companies."
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