A-B InBev Inches Closer To Dominating Boring Beer Market

Though Anheuser-Busch InBev may have failed in its Worst Company In America battle against Electronic Arts, the beer behemoth is getting much closer to owning even more big-name beer brands, saying it has reached an agreement in principle with the Dept. of Justice that would allow it to acquire the rest of Mexico’s Grupo Modelo.

The DOJ had filed suit in January to stop the deal, claiming it would give the combined company control of nearly 50% of the U.S. beer market. The DOJ was also concerned about the impact on the overall retail pricing of beer in the U.S., as Grupo Modelo had often priced its beverages competitively while A-B InBev and its biggest competition, MillerCoors, have a tendency to just follow each other’s lead in price increases.

While A-B InBev’s announcement from Friday doesn’t provide exact details on its agreement with the DOJ, it does say that it is “substantially in line with the revised transaction announced on February 14, 2013.” This is referring to a proposal offered after the DOJ lawsuit that would sell Modelo’s Piedras Negras brewery to a company called Constellation, which currently distributes Modelo products in the U.S. The deal would also grant perpetual rights to Constellation for Corona and other Modelo brands in the U.S. Constellation would pay $2.9 billion for the package deal and and A-B InBev would be able to purchase the remaining 50% of Grupo Modelo it doesn’t currently own.

Here is how the merger partners diagrammed that proposal for appeasing regulators (click image to enlarge):
abinbevproposal

It’s possible that what the DOJ has allegedly agreed to is slightly different than this. The deal also still requires approval of regulators in Mexico.

[via St. Louis Biz Journals]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.