AB InBev to buy Modelo this year-broker Evolution

LONDON, March 9 Tue Mar 9, 2010 9:19am EST

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LONDON, March 9 (Reuters) - Anheuser-Busch InBev (ABI.BR), the world's largest brewer, is likely to buy the 50 percent it does not own of Mexican brewer Grupo Modelo (GMODELOC.MX) this year for around $10.8 billion, said broker Evolution Securities.

A Modelo deal could follow Heineken's (HEIN.AS) acquisition of Mexico's other big brewer FEMSA Ceverza (FMSAUBD.MX) in January, and Evolution said Modelo with its larger share of the domestic and export beer markets is the more attractive brewer.

"We believe that a deal is likely to be announced this year ... We believe that a Modelo acquisition would provide a catalyst for outperformance," said analyst Andrew Holland in a broker's note on Tuesday.

Modelo, which brews Corona beer, controls 58 percent of the world's sixth largest beer market, Mexico, compared to FEMSA's 42 percent, and accounts for 88 percent of Mexico's beer export market compared to FEMSA's 12 percent, the broker said.

AB InBev gained its 50.2 percent economic stake and 43.9 percent voting stake in Modelo after InBev's acquisition of Anheuser-Busch in late 2008. The controlling shareholders of Modelo are several families of the founders of the various brewers which now make up the Mexican brewer.

The broker says that assuming a takeover Enterprise Value/Earnings before interest, tax, depreciation and amortisation multiple of 11.6, the same as the Heineken-FEMSA deal, put a value on 50 percent of Modelo at $10.8 billion. Evolution says now that AB InBev has completed its disposal programme after its Anheuser deal and this acquisition has been refinanced, the timing for a Modelo deal was right.

It added that the arbitration between AB InBev and Modelo over the legality of AB InBev's acquisition of Anheuser's stake in Modelo has lasted longer than expected, encouraging speculation the two sides may be discussion a full acquisition.

AB InBev was not immediately available for comment. (Reporting by David Jones; Editing by Hans Peters)

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