Newspaper article St Louis Post-Dispatch (MO)

A-B, Justice Dept. Reach Agreement on Modelo Deal (Copy)

Newspaper article St Louis Post-Dispatch (MO)

A-B, Justice Dept. Reach Agreement on Modelo Deal (Copy)

Article excerpt

It looks like Anheuser-Busch InBev will get to close its big deal south of the border after all.

The world's largest brewer said Friday that it has reached an agreement with U.S. antitrust regulators that will allow its $20 billion purchase of Mexico's Grupo Modelo to go forward.

In February, the Justice Department sued to block A-B's takeover of the Corona parent company, arguing that a tie-up of the No. 1 and No. 3 best-selling brewers in North America would give one company too much pricing power and hurt consumers. But after Anheuser-Busch agreed to amend its deal to sell Modelo through a third party, and to sell off a huge Mexican brewery that makes Corona for the U.S. market, it appears that the feds' antitrust concerns were satisfied.

"We have reached an agreement in principle with the parties," said Justice Department spokeswoman Gina Talamona in a statement late Friday.

The deal isn't final just yet.

Friday's filings simply request that the federal judge hearing the case delay proceedings set to start Tuesday for another two weeks. The two parties had requested two previous stays while they negotiated. But this time both sides said in statements that they have reached an agreement and just need a little time to iron out details. This, said A-B InBev, would be the "final request" for more time.

Under the deal, New York-based Constellation Brands would have the full rights to sell all Modelo products in the United States, as a third-party independent of Anheuser-Busch. Constellation would also buy Modelo's brewery in Piedras Negras, Mexico, where most of the company's U.S.-bound beer gets brewed, for $2.9 billion, creating an extra layer of separation between Anheuser-Busch and U.S. consumers of Modelo.

That's a sizable sacrifice for A-B to make, said Tom Pirko, at California-based beverage consulting firm BevMark. …

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