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MENAFN - AFP - 31/01/2013

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(MENAFN - AFP) US antitrust authorities sued Thursday to block the 20.1 billion takeover of Mexican brewer Grupo Modelo by Belgian-US giant Anheuser-Busch InBev, saying the combined firm would have too much power over the US beer market.The move put on hold the takeover announced last June that would give the combined company, with brands like Budweiser, Stella Artois and Corona, a 46 percent hold on the US market, according to the Justice Department, and a bigger lock on Mexico's.The US Justice Department said the suit "seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate.""If ABI fully owned and controlled Modelo, ABI would be able to increase beer prices to American consumers," said Bill Baer, the assistant attorney general who heads the Justice Department's anti-trust division."This lawsuit seeks to prevent ABI from eliminating Modelo as an important competitive force in the beer industry."The proposed merger quickly raised worries over consolidation in the beer market when it was announced last June.ABI aleady holds 50 percent of Modelo in a non-controlling stake and proposed to purchase the rest in the cash deal.Part of the cost would be covered by ABI selling to US group Constellation Brands its half of the capital of the US importer of Corona, Crown Imports, for 1.85 billion.Constellation Brands already owns half of the importing firm.But that deal, too, is now on hold because of the Justice Department lawsuit.ABI shares fell 6.7 percent on the Nasdaq after the news, while Constellation plunged 18.5 percent.In Mexico, Modelo shares sank 7.5 percent.In a statement, ABI criticized the suit as "inconsistent with the law, the facts and the reality of the market place."e"We remain confident in our position, and we intend to vigorously contest the DOJ's action in federal court. Given today's development, we no longer expect the deal to close during the first quarter of 2013."

 






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