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AB Inbev could agree a deal with brewer Modelo later today

Belgian brewer Anheuser-Busch InBev NV (EBR:ABI), or AB Inbev, is working on the final details of a deal worth some USD15bn (EUR12.1bn) in cash to buy out Mexican peer Grupo Modelo SAB de CV (PINK:GPMCF) and could unveil an agreement on Friday, according to informed sources cited by Reuters.

In response to earlier media reports on a potential takeover, the Belgian brewer confirmed on 25 June it was in talks over a potential transaction that would expand its existing relationship with 50%-owned Modelo, the maker of the Corona beer brand.

Espirito Santo (ELI:BES) investment bank analyst Martin Dolan was cited by Reuters as saying that a deal is very likely to happen and it would make perfect sense for both companies.

A transaction could include an agreement for AB Inbev to also buy out the Mexican beer maker’s joint venture with US imported beer marketer Constellation Brands Inc (NYSE:STZ), which imports Corona in the US, with analysts saying that this addition to the deal would cost AB InBev another USD1.75bn.

The growing beer market in Mexico and cost savings for distribution and procurement seen by analysts at annual USD250m are among the reasons for AB Inbev to pursue this deal, the report said.

In an earlier report, Bloomberg cited BTG Pactual analyst Rafael Shin as saying that a buyout would help AB Inbev increase profit by reducing costs and create a stronger competitor for Dutch Heineken NV (AMS:HEIA). Modelo already leads Heineken in Mexico, the world’s sixth largest beer market, Shin added.

The Belgian group took the 50% stake in Modelo as part of its acquisition of Anheuser-Busch in 2008.

Heineken owns in Mexico the beer operation of Fomento Economico Mexicano SAB (NYSE:FMX) acquired in 2010.


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