Mexico's Modelo seen embracing InBev bid for Bud

MEXICO CITY (Reuters) - Mexico's No. 1 brewer, Modelo, run by a family not known for risk taking, is expected to emerge from InBev's $46.3 billion takeover battle for Anheuser-Busch with only one major change -- a new partner.

Modelo, already 50 percent owned by Anheuser, is expected to block any attempt by the brewer of Budweiser to buy full control as a defensive move. Neither does it want to take on billions of dollars of debt to buy back its stake in the St. Louis-based giant.

Analysts say the most likely outcome is that Modelo, which makes Corona beer, will embrace InBev's bid for Anheuser and hope the Belgian brewer proves to be a more dynamic and innovative partner than the biggest U.S. brewer.

"At the end of the day, if InBev buys Anheuser, Modelo is going to play safe. OK, now I don't have Anheuser causing me grief. I have InBev and everything remains the same," said Ixe brokerage analyst Marco Reyes.

Modelo CEO Carlos Fernandez told Reuters two weeks ago -- before InBev launched its $65 a share bid for Anheuser -- that he expected his company, which has no debt and more than $1 billion in cash, to remain in Mexican hands.

Fernandez's uncle and family patriarch, Antonino Fernandez, controls Modelo's family voting trust, which analysts say is bent on remaining independent, despite consolidation in the global beer industry and the rich pickings from selling.

One theory is that Anheuser-Busch Cos Inc (BUD.N) could dodge the InBev NV INTB.BR bid by buying 100 percent of Grupo Modelo (GMODELOC.MX), which would make its combined holdings too expensive to take over given the current global financial turmoil.

But analysts do not see that happening.

"There are so many obstacles to selling that I see it as unlikely," said Vector analyst Laura Herrera. "All the family has to say 'we sell'."

Banamex bank, Citigroup Inc's (C.N) Mexican arm, agrees.

"The controllers of Modelo are not interested in selling their stake," Banamex said in a research note.

INBEV WELCOMED

Analysts also question why the Fernandez family would want to sacrifice its own independence to help the Busch family remain independent, especially given the friction between the two partners.

Only last year, Modelo linked up with Constellation Brands, a leading wine and liquor player, to form Crown Imports LLC to be the sole importer of Modelo's brands in the United States, a blatant snub of Anheuser.

Modelo is also not seen running to the bank to raise cash to buy back Anheuser's stake, worth an estimated $10 billion, because it already controls the board and repurchasing the 50 percent would go against its strategy.

"How much are you going to be able to take on debt if you are a company that has never liked taking on debt?" asked Ixe's Reyes. "It is more than just complicated," he added, pointing out that Modelo does not have an automatic option to buy back Anheuser if the U.S. brewer is acquired.

So analysts are betting Modelo will eventually welcome InBev as its new partner. InBev was formed in 2004 when Belgium's Interbrew bought Brazil's AmBev.

"InBev is definitely a good partner. It has all the experience of the Brazil (takeover) and therefore it could work out well (for Modelo)," added Vector's Herrera.

(Editing by Andre Grenon)