The acquisition of U.S. distribution rights for Grupo Modelo beers and a Mexican brewery from Anheuser-Busch InBev makes Constellation Brands Inc. the third-largest beer supplier,
the
Wall Street Journal
reported.
Constellation already is one of the world’s largest wine companies, the article said.
AB InBev divested itself of the U.S. distribution rights to Modelo beers and the brewery in order to obtain Justice Department approval for its takeover of Grupo Modelo.
The
Journal
report noted that Constellation, now publicly traded, began selling bulk wine in 1945. Its three CEOs have all come from the founding Sands family. The family has voting control, the
Journal
article said.
The
Journal
article noted that Constellation “has repeatedly reinvented itself through a flurry of acquisitions and divestments.” After the Modelo deal, Constellation’s revenue will double to more than $5 billion, half of which will come from beer, the article said. The company’s share price has risen 140% since last June.
Constellation plans to invest up to $600 million in the next three years to double capacity at the Mexican brewery it has acquired as part of the deal, the
Journal
article said. Constellation CEO Rob Sands told the
Journal
that although his company lacks brewing experience, the brewery is highly automated, and he is considering offering raises to keep essential brewery personnel at the company. Sands also told the
Journal
he expects that the acquisition will result in a better negotiating position with suppliers and retailers. (Source:
Wall Street Journal,
June 7, 2013.)
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