The latter will now have sole control of their import, marketing and distribution in that territory.
Belgian headquartered AB InBev said the new combination offered significant growth opportunities by fusing distribution networks and brand portfolios – five of the top six and seven of the top ten most valuable world beer brands.
Beer boom in Mexico
Mexican consumers would benefit from the transaction – which both management teams expect to close in Q1 2013 – through access to a greater variety of beers through AB InBev’s portfolio, the beer giant said.
AB InBev noted that Mexico was the second-largest Latin American economy with a rising middle class, and beer the largest alcoholic beverage category with a 70% market value share worth $22bn in retail sales.
Meanwhile, Corona would become a global flagship brand alongside Budweiser, Stella Artois and Beck's, AB InBev said, since there were “meaningful opportunities to grow Corona globally outside the US and Mexico” given AB InBev's distribution network and extensive resources.
Grupo Modelo will retain its name and HQ in Mexico City, under the terms of the $9.15 per share deal (a 30% premium on the Mexican brewer’s June 22 share price in a deal worth $20.1bn overall) that AB InBev said it hoped would yield annual synergies of at least $600m.
Heritage and brands
Carlos Brito, CEO of AB InBev, said that as a result of the deal: "AB InBev will be a more global company, our portfolio of brands will be enriched. Corona will join Budweiser as one our global flagship brands, and these two brands will join Stella Artois and Beck's, as part of our four global brands.
“The beauty of this new enriched portfolio is that these brands complement each other in terms of position. Until the transaction closes it's business as usual, but we expect the transaction to close in Q1 2013. It's a win-win for everybody” he added.
Carlos Fernandez, chairman and CEO of Grupo Modelo said: "Together we will be the leading global brewer with top brands around the world and positions in some of the fastest growing countries.
"This is an exciting transaction that will bring our brands and proud heritage to even more consumers internationally while offering an increasing number of AB InBev's brands in Mexico.
"Grupo Modelo's Board believes that this combination will deliver significant benefits for all stakeholders," he added.
'Significant milestone' for Constellation
Constellation Brands' buyout of Crown Imports was a "significant milestone" in his company's history, according to president and CEO Rob Sands.
He said: "Our full ownership of this significant beer business provides an additional strategic lever for driving overall profitable organic growth.
"We expect this transaction to dramatically enhance the financial profile of our company and it will solidify Constellation Brands' position as the largest multi-category supplier of beverage alcohol and the third largest total beverage alcohol company in the US."
What happens next?
1. Transaction subject to Grupo Modelo shareholder approval and regulatory green light in US, Mexico and other jurisdictions.
2. Grupo Modelo simplifies corporate structure by absorbing subsidiaries, including its glass bottle manufacturer Direccion de Fabricas.
3. AB InBev commences all-cash tender offer for outstanding Grupo Modelo shares (part funded by bank facilities totaling $14bn).
