Mexico's Modelo in middle of Anheuser battle

By Martinne Geller and Chris Aspin

NEW YORK/MEXICO CITY (Reuters) - Mexico's No. 1 brewer Modelo, maker of Corona beer, has become a critical power broker in the battle for control of the largest U.S. brewer Anheuser-Busch.

Modelo is reportedly being courted by both Anheuser, which already has a 50 percent stake in it, but not boardroom control, and Belgian-Brazilian InBev. The way it plays its cards could decide who comes out on top in the consolidation of the global beer industry.

"They are essentially the poison pill for Anheuser-Busch to dodge InBev," said Robbert van Batenburg, an analyst with Louis Capital Markets in New York.

Anheuser, which has had a Busch family member at the helm for most of the last century and a half, would like to stay independent, said Morningstar analyst Ann Gilpin. Like other analysts, she said one of the only ways Anheuser might be able to do that is by buying the other half of Modelo (GMODELOC.MX).

That would make it more difficult for InBev NV INTB.BR to succeed in its $46.3 billion takeover bid for Anheuser-Busch Cos Inc BUD.N>, which said this week it will consider InBev's proposal and decide in due course.

Preliminary merger talks between Anheuser and Modelo have begun, according the Wall Street Journal.

But Modelo is "tightly family controlled and in many ways more of a Mexican icon than AB is an American icon," said Tom Pirko, president of Bevmark LLC, a California-based consultant to the beverage industry.

"It is hard to imagine the family selling out to St. Louis," Pirko said, adding that he thinks Modelo will "take a shot at buying themselves back from InBev if InBev succeeds in taking out AB."

CNBC television reported that InBev would "be happy" to let Modelo buy back its stake, and a source familiar with the situation told Reuters that InBev is believed to have already reached out to Modelo.

That would be "a win-win" situation for Modelo and InBev, Pirko said, since the sale would help InBev finance its Anheuser acquisition. The stake, which Anheuser bought for around $1.6 billion, is now believed to be worth roughly $10 billion, according to analyst estimates.

Modelo could not be reached, InBev declined to comment and Anheuser has repeatedly declined to comment.

PLEASING THE PATRIARCH

In its bid for Anheuser, InBev immediately made overtures to Modelo saying it would hope to work with the maker of Victoria and Montejo beers to find new opportunities to further accelerate the development of brands outside North America.

Last week, Modelo's CEO Carlos Fernandez told Reuters that he has a lot of different options as the global beer industry consolidates but that he expected the company to remain controlled by Mexicans in one year's time.

"I can tell you today that we will continue working as we are working today, controlled by Mexicans, and going forward with our own strategy," said Fernandez, who also sits on Anheuser's board.