Corona importer loses big in beer industry dustup
Constellation Brands' stock plummets after the Department of Justice blocks Anheuser-Busch InBev from buying Grupo Modelo.
Last summer, A-B made a $20.1 billion deal to increase its 50% stake in Mexican brewer Grupo Modelo and take control of its Corona, Modelo and Pacifico brands.
According to the Wall Street Journal, the Department of Justice filed suit on Thursday to prevent the deal from going down, saying it "would result in less competition and higher beer prices for American consumers." That undid Constellation's plan to buy Modelo's 50% stake in Crown Imports for $1.85 billion and become the sole exporter of Modelo products. That, in turn, sent Constellation stock plummeting more than 24% and forced Nasdaq to temporarily halt trading because of the volatility.
That's a shame for Constellation, but it's also a sign that the Justice Department didn't like the smell of this deal one bit. A-B and Constellation's argument was that Modelo's sale of its stake in Crown Imports gives Constellation the U.S. market share for any Modelo, Corona and Pacifico products sold in the U.S. Never mind that A-B would own Modelo and use its extensive distribution system to send it all over the country: Constellation would be the necessary middle man and take that unwieldy burden off A-B's shoulders while doubling its revenue in the process.
Even though Mexico's antitrust group OK'd the deal, the DOJ still wasn't buying it. Taking A-B out of the equation for a moment, Crown Imports' 5.7% U.S. market share is nearly equal to that of the entire craft beer industry combined, according to industry group the Brewers Association. It's larger than the 4% U.S. presence of European megabrewer Heinkeken and five times that of Guinness owner Diageo (DEO).
A-B has vowed to continue its battle in court, but the damage to Constellation has already been done. Constellation's plans for 2013 hinged on A-B's deal for Modelo being completed in the first quarter. Without it, Constellation's 2013 looks not only half-empty, but skunked.
More on moneyNOW
is a thunderstorm in the atlantic, or utilities to merge and ask for higher prices, or for cable
and internet providers to use their monopoly powers in each city to gouge their customers,
but a beer company merger could be bad for the economy. i guess they didn't make the right
campaign donations during the elections. what a rip-off for the consumers. but we are safe
from the big beer monopolies. a giant load of crap is what it is !!!
Anyone who is against this doesnt understand that the DOJ is preventing a monopoly. That is within its purview.
Making sure the market stays open for smaller breweries is what best for everyone.
Looks like they forgot to buy the right congressman! They will get it right next time remember NAFTA!
Washington is worried about our beer, they should be concerned about the recent spike in gas prices why isn't anyone focusing more attention on that? $.39 spike since Jan 1st come on that's a monopoly.
I prefer cask conditioned ale found in US micro breweries and in England. My opinion
of american beer is similar to having sex in a canoe, f-----g close to water.
Bud bought Rolling Rock, stopped making it in Latrobe and basically killed the brand. They might be doing the same thing to Corona not expanding its distribution.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The major averages punctuated a solid week with a subdued Friday session. The S&P 500 shed 0.2% to narrow its weekly gain to 1.7%, while the Nasdaq Composite (+0.1%) displayed relative strength. The tech-heavy index finished the week in line with the benchmark average.
Market participants went into today's session expecting to hear some new insight from Fed Chair Janet Yellen, who delivered the keynote address at this year's Jackson Hole Symposium. Unfortunately, the ... More
More Market News
These companies won't soar like other plays in the sector, but they make for great income sources.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'