By Diane Bartz
WASHINGTON, April 5 Anheuser-Busch InBev
and the U.S. Justice Department have reached an
agreement for a framework to settle their long-running beer
brawl, and asked a court to extend a stay in the court fight
until April 23, the two sides said in a court filing on Friday.
The Justice Department filed a lawsuit on Jan. 31 aimed at
stopping AB InBev, the world's largest brewer with some 200
brands, from buying the 50 percent of Grupo Modelo
it does not already own for $20.1 billion, saying the deal could
mean higher U.S. beer prices.
That battle may soon be over. "At this time, the parties
have reached an agreement in principle on a resolution of this
litigation," AB InBev and the Justice Department said in a joint
filing to the court.
When the deal was originally announced, AB InBev knew that
it faced potential trouble in winning U.S. antitrust approval.
So it said upfront that it would sell its 50 percent share of
Modelo's U.S. distributor, Crown Imports, to Constellation
Brands, the world's largest branded wine company.
But the Justice Department's Antitrust Division argued that
the company had such a large U.S. market share that it would
have the ability to raise prices, and it sued to stop the deal.
AB InBev sweetened its offer to the Justice Department in
February, saying it was willing to sell Modelo's Piedras Negras
brewery in Mexico near the U.S border to Constellation for $2.9
billion and that it would grant Constellation perpetual rights
for Corona and other Modelo brands in the United States.
Analysts have said the main benefits of the proposed deal
for AB InBev lie in Mexico, the world's fourth largest market in
terms of profit generated, and in driving Corona sales outside
the United States.
The agreement in principle is "substantially in line" with
the February proposal, Anheuser-Busch InBev said in a statement.
"The parties request this additional stay so that they may
finalize the details of a proposed consent judgment and related
papers," the two sides said in the filing. "The parties expect
this to be their final request to extend the stay."
Despite a huge array of beers on store shelves, the U.S.
beer market is dominated by two big players.
AB InBev is the top seller, with 200 brands ranging from big
names like Budweiser and Stella Artois to craft-style beers like
Shock Top and Goose Island. The No. 2 player is MillerCoors, a
joint venture between SABMiller Plc and Molson Coors
"Any settlement would have to fully protect U.S. consumers
by preserving the competition that Grupo Modelo currently
provides, while giving a divestiture buyer the freedom and
capability to compete vigorously going forward," Justice
Department spokeswoman Gina Talamona said in an statement.
If the two sides do finalize an agreement, it will need to
be approved by the court. The proposed transaction also must be
approved by Mexican regulators.
AB InBev, formed in 2008 when InBev bought Anheuser Busch,
was the top U.S. brewer with 47 percent of the U.S. beer market
going into the Modelo deal.
The deal has a huge upside for New York-based Constellation
Brands, which makes Robert Mondavi and Ravenswood wines. It also
sells spirits including Black Velvet Canadian Whisky and Svedka
The revised deal would make Constellation the third largest
U.S. beer producer.
As part of its effort to sweeten the deal, AB InBev and
Constellation agreed in February to a three-year transition
period, during which Constellation would invest $400 million to
expand Piedras Negras's capacity to enable it to supply 100
percent of U.S. needs, up from 60 percent today.
AB InBev would supply Constellation with beer, cans and
other assistance over this period. Constellation would have the
option to extend the beer supply period by up to two more years.
The case was filed in the U.S. District Court for the
District of Columbia. It is United States of America v.
Anheuser-Busch InBev and Grupo Modelo. The case is No.