* Buying Modelo's half of Crown for $1.85 bln
* Q1 EPS ex-items 40 cents vs Street view 39 cents
* Suspends buybacks; stands by '13 EPS outlook
* Shares up 25 pct, highest in more than 5 yrs
June 29 (Reuters) - Constellation Brands Inc will buy the remaining half of its Crown Imports joint venture in a $1.85 billion de al that gives it f ull control of distributing the popular Corona Extra be er in the United States and could lead it to buy more brewers.
Constellation shares jumped 25.8 percent to their highest level i n more than five years, as the deal to buy out Grupo Modelo gives Constellation control of the best-selling imported beer in the lucrative U.S. market.
The deal is a "game changer" for Constellation, already the world's largest branded wine company, according to UBS analyst Kaumil Gajrawala.
"It removes an important overhang on the stock, diversifies their revenue base, doubles their equity income from Crown and gives the company a more significant foothold in the U.S. beer market," Gajrawala said.
Constellation said on Friday it was buying the half of the joint venture it doesn't own from its partner, Mexican brewer Modelo, wh ich is being acquired by Anheuser-Busch InBev .
Analysts said anti-trust concerns likely prompted the sale of the stake, as AB InBev already controls some 49 percent of the U.S. beer market with brands like Bud Light.
Constellation also reported slightly better-than-expected quarterly profit on Friday and stood by its full-year earnings outlook.
The maker of Robert Mondavi and Ravenswood wines also said it plans to buy the Mark West pinot noir wine brand for $160 million.
Constellation said it had fully committed bridge financing in place to complete the p urchase of Crown and expects the deal to boost its earnings and cash flow.
AB InBev will have the right, but not the obligation, to exercise a call option for 100 percent of Crown every 10 years at a multiple of 13 times Crown's operating earnings, gua ranteeing Constellation a minimum payment for the business.
The earlier joint venture agreement was in place until 2016, and its renewal was uncertain. Now that Constellation will have the business moving forward, the company, and investors, can put more value on it, Constellation Chief Executive Rob Sands said.
"With that uncertainty gone and having a perpetual contract, clearly that makes it a business we're going to be much more inclined to invest behind," Sands told Reuters in an interview.
Crown will have complete control of the brands, including distribution, marketing, promotion and pricing. AB InBev, which is paying $20 billion for the half of Modelo it doesn't own, will be responsible for insuring the supply and quality of the beers and for introducing new products.
In addition to more control over the Modelo brands, which include Pacifico and Victoria, the deal gives Constellation more flexibility to buy or develop other beer brands though Sands said the company will be focused on its current deal for right now.
Stifel Nicolaus analyst Mark Swartzberg upgraded his stock rating on Constellation shares to "buy" on the news, saying the beers' large market position and growth trajectory should give Constellation a higher trading multiple.
Excluding one-time items, Constellation earned 40 cents per share in i ts just-ended fiscal first quarter. On that basis, analysts on average were expecting 39 cents, according to Thomson Reuters I/B/E/S.
Net sales slipped to $634.8 million from $635.3 million.
Crown Imports contributed $215 million in equity earnings to the company in fiscal 2012, Constellation said in a statement. In an interview, CEO Sands said owning the whole business will improve his company's earnings potential moving forward.
The deal is expected to close during the first quarter of 2013, which is the last quarter of Constellation's fiscal year. That is why Constellation did not update its earnings outlook, but said it still expects 2013 earnings of $1.93 to $2.03 per share, excluding one-time items.
The company also suspended its current share-buyback program as it pays down debt from the deal.
Constellation shares were up $5.06, or 23.3 percent, at $26.82 in afternoon trade on the New York Stock Exchange. Ea rlier, the stock hit $27.39, its highest in more than five years.