With its main rival, Femsa SAB, holding merger talks with several companies, Mexican brewer Grupo Modelo could be pressured to strengthen its “increasingly strained relationship” with Anheuser-Busch InBev,
the
St. Louis Business Journal
reported.
A merger between Femsa and a global partner, the article said,
could finally convince Modelo shareholders to drop their resistance to what many analysts expect will become inevitable — a complete sellout to Anheuser-Busch InBev.
Anheuser-Busch purchased a 17% stake in Modelo in 1993. It later invested another $1.6 billion to gain control of 50% of Modelo’s stock and about 35% of its voting power, the report noted.
Although partners, the two companies have butted heads over the years. After a 1994-1995 devaluation, Modelo objected to granting Anheuser-Busch a discounted purchase price. It went to international arbitration to solve the matter, and Anheuser-Busch won. Relations became testy again in the summer of 2008. When Belgium-based beer titan InBev began making offers to buy Anheuser-Busch, the St. Louis brewery considered buying out the half of Modelo it did not already own as a way of making itself too expensive for InBev. But key members of Modelo’s controlling family resisted. In October 2008, after Anheuser-Busch agreed to sell out to InBev for $52 billion, Modelo filed for arbitration again. It argued its investment agreement prohibited the Budweiser brewer from transferring its interest in Modelo to a competitor without first giving Modelo’s controlling shareholders an opportunity to buy back the shares. Anheuser-Busch and InBev said Modelo’s claim lacked merit and went ahead with their deal. Yet the arbitration continues.
An analyst told the journal that Modelo is inefficiently managed and would benefit from a takeover by Anheuser-Busch InBev. (Source:
St. Louis Business Journal,
Oct. 16, 2009.)
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