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A-B Reports Progress in Talks With DOJ Over Modelo Deal

ST. LOUIS -- Anheuser-Busch InBev's bid to purchase the remaining stake of Grupo Modelo S.A.B. de C.V. it doesn't already own hit a snag in late January. However, the beer maker said talks with the U.S. Department of Justice (DOJ) are moving forward.

Last week, A-B InBev, Grupo Modelo, Constellation Brands Inc. and Crown Imports LLC – all involved in the revised proposed transaction -- and the Department of Justice jointly approached the court to request an extension of the stay on their current litigation -- which is due to expire on March 19 -- to April 9. With the extension, all involved expect to be able to complete talks. If an agreement is reached, the parties will file a proposed consent judgment and related documentation with the court.

However, according to an A-B InBev statement, "there can be no assurance that the ongoing discussions will be successful."

In June, Anheuser-Busch InBev revealed plans to buy the remaining stake in Grupo Modelo for $20.1 billion. A-B InBev already owns more than a 50-percent stake in the Mexican-based brewer of Corona, Modelo and Pacifico beers. The combined company will have operations in 24 countries, 150,000 employees and 2012 estimated revenues of $47 billion, as CSNews Online previously reported.

As part of the deal, A-B InBev also announced that Grupo Modelo would sell its 50-percent stake in Crown Imports to Constellation Brands.

However, the DOJ filed suit to block the deal in late January. According to the DOJ, if approved, the deal would further expand A-B InBev, the world's largest brewer, by allowing it to take control of Modelo's Corona Extra and Modelo Especial beer brands. It argued that the transaction would hurt competition and raise beer prices for consumers. In addition, the DOJ stated A-B InBev -- parent of Budweiser -- and Modelo combined would control about 46 percent of the annual U.S. beer market. MillerCoors is second at 29 percent of nationwide sales.

Talks began in February after A-B InBev revised its agreement to pick up the remaining portion of Grupo Modelo it does not already own. Under terms of the revised agreement, once the transaction is complete, A-B InBev will sell its full U.S. Grupo Modelo interest to Victor, N.Y.-based Constellation Brands Inc. A-B InBev also will sell Compania Cervecera de Coahuila, Grupo Modelo's brewery in Piedras Negras, Mexico.


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