By Martinne Geller
NEW YORK Feb 8 Constellation Brands Inc
asked to be joined as a defendant in the U.S. government's
lawsuit to block Anheuser-Busch InBev's proposed
takeover of Corona beer maker Grupo Modelo,
seeking to protect its own interests in the mega merger.
As part of AB InBev's plan to buy the half of Modelo it does
not own for $20.1 billion, Modelo would sell its half of the
Crown Imports joint venture to its partner, Constellation, for
But if the deal falls apart as a result of the action by the
U.S. Department of Justice, Modelo would likely seek to buy
Constellation's stake in Crown, since it has signaled its
intention to do so from the start and renewed its intention
recently, the motion shows.
That would be a huge loss to Constellation, leaving it with
mostly a wine business, which has agricultural volatility and
little brand loyalty. At the time the deal was announced,
analysts called it a "game-changer" for Constellation.
When asked if Constellation would seek other beer
acquisitions, a source close to the company said it would
consider all its options. A spokeswomen declined to comment.
A spokeswoman for Modelo confirmed the existence of the call
option to take over Crown, at the end of 2016, but would not
speculate on what the company would or would not do.
SEAT AT THE TABLE
Constellation, whose brands include Robert Mondavi and
Ravenswood, filed the motion to intervene in U.S. District Court
for the District of Columbia. It was made public on Friday.
"If things go sideways, ABI and Modelo are not going to
represent Constellation's and Crown's interests," said a source
close to Constellation, adding that Constellation wants "a seat
at the table".
AB InBev, the world's biggest brewer, filed a memorandum in
support of the motion. Grupo Modelo joined in the filing.
On Jan. 31, the U.S. Department of Justice sued to block the
deal, saying it could mean higher U.S. beer prices.
The antitrust suit calls into question the future of one of
the biggest deals of 2012, which would add beers like Corona
Extra and Modelo Especial to a giant portfolio that already
includes Budweiser, Beck's and Stella Artois.
The companies have challenged the thinking of the DOJ,
saying the net effect is "a more effective and competitive
Crown," since Crown will be owned by Constellation, a
competitor, instead of half-owned by Modelo, its supplier, as it
Constellation also said in a statement that Crown will
compete more effectively in the future due to more favorable
Through a revised supply agreement, Crown is protected from
interference from its supplier, Constellation said, noting that
the cost of beer purchased is based on a formula that adjusts
annually at a rate below the U.S. Consumer Price Index.
The case is: U.S. v. Anheuser-Busch InBev SA/NV et al, U.S.
District Court, District of Columbia, No. 13-00127.