Belgium & USA & Mexico: AB InBev / Modelo deal likely to get the green light due to concessions made - analyst

Anheuser-Busch InBev's concessions over its Grupo Modelo acquisition means it is now likely to get the green light from US regulators, according to an analyst.

In a note on February, 14, Stifel analyst Mark Swartzberg said: "We expect the Department of Justice (DoJ) to approve the transaction as it is aggressive, was motivated by the DoJ's objections, and, in our opinion, satisfies them by making Crown a truly independent competitor of AB InBev in the US."

It came after AB InBev announced this week that it will sell the perpetual rights to Modelo's products in the US and the Mexican group's Piedras Negras brewery to Constellation Brands for US$2.9 bln.

The concessions came after the DoJ filed an anti-trust lawsuit over the $20.1 bln deal.

However, Swartzberg noted that brewing is a "new line of business" for Constellation and Crown Imports management and carries "execution risk". But he added: "Nine times EBITDA is the low end of brewer multiples, suggesting this business still has a positive present value, or is potentially additive to $45 per share, all else being equal."

20 February, 2013