AB InBev eyes up Modelo

Is the world’s biggest brewer, Belgian group AB InBev, about to guzzle the 50% of Mexican leader Modelo it does not already own?

The maker of Stella Artois and Leffe beers has confirmed it is in talks with Modelo.

The news was welcomed by investors in Brussels where the share rose over 2% on Monday, the biggest riser on a weak Bel20 index.

Modelo’s crown jewel is Corona, one of the world’s most popular beers, and the number one imported tipple in the US.

AB InBev says it is ready to buy the half of Modelo it does not already own for the market price, 9.6 billion euros. Analysts reckon the purchase could add 10% to InBev’s profits.

This is because, just like Modelo, AB InBev is strongly implanted on American soil, notably with the Budweiser brand. As neither group uses the same distribution network, a takeover will allow big costs savings.

It will also reinforce AB InBev’s position as leader in a sector that is busy consolidating and which has seen notable recent acquisitions by world number two SAB Miller of Britain and the Dutch number three Heineken.

To pull off the buyout, the Belgians must now convince Modelo’s founding families to sell out. They are reportedly not happy with the idea.

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