Constellation attacks DOJ reasoning in move to block Modelo deal

Fri Feb 1, 2013 10:18am EST

View of Anheuser-Busch InBev logo outside the brewery headquarters in Leuven June 25, 2012. REUTERS/Francois Lenoir

View of Anheuser-Busch InBev logo outside the brewery headquarters in Leuven June 25, 2012.

Credit: Reuters/Francois Lenoir

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(Reuters) - Constellation Brands Inc (STZ.N) on Friday attacked the U.S. government's move to block Anheuser-Busch InBev's (ABI.BR) proposed $20.1 billion takeover of Mexican brewer Grupo Modelo (GMODELOC.MX).

Constellation, which would become the sole U.S. distributor of Modelo beers like Corona and Negra Modelo through a related $1.85 billion transaction, said Thursday's action by the Department of Justice "demonstrates its incomplete understanding of the proposed transaction."

The U.S. Department of Justice is moving to block AB InBev, the world's biggest brewer, from buying the half of Modelo it does not already own, saying the combination would hinder competition and lead to higher beer prices.

Constellation said the DOJ has "overlooked the existence and commercial activities" of Crown Imports, the U.S. seller of Modelo's beers. Crown is currently owned by Modelo and Constellation, but Constellation plans to take Crown over if Modelo gets taken over.

Constellation claims that competition will actually improve if it takes over Crown, since it will not be part owned by its supplier.

Constellation shares were up 2 percent at $33.05 in morning trade on the New York Stock Exchange. Shares of AB InBev were up 4 percent at 66.52 euros in Brussels.

(Reporting By Martinne Geller in New York; Editing by Gerald E. McCormick and Sofina Mirza-Reid)


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