AB InBev and Grupo Modelo Reach Accord with Justice Department

The Department of Justice in the U.S. announced this week that it had reached a settlement with Grupo Modelo and Anheuser-Busch InBev over a merger between the two companies. The deal is worth an estimated $20 billion. The DOJ approval was announced after both beer giants reached a settlement with the Justice Department over the Department’s concerns over antitrust problems.

The two companies agreed to divest all of the businesses Grupo Modelo has in the U.S. to another company named Constellation Brands. Included in that divestiture are all the licenses for the brand name Corona and other beer products.

The accord now enables Constellation Brands to become an independent and fully integrated viable competitor in the beer industry, said Bill Baer the DOJ’s head of the antitrust division. A federal court’s approval of the settlement is still needed, but is expected.

In the settlement, Constellation receives Modelo’s brewery in Mexico, the licenses for Modelo beers in the U.S. and Modelo’s joint venture interest with Crown, which is a beer importer and distributor of certain Modelo brands in the U.S.

In the original deal, the DOJ argued it was configured in a way that would be harmful to U.S. consumers. The DOJ said the original merger plan could have increased prices for consumers because of less competition in the marketplace.

A company spokesperson for Constellation Brands announced the company was spending in excess of $4.75 billion in acquiring the assets of Modelo in the U.S.

AB InBev will now be the owner of Modelo’s Mexican businesses and will be able to market Corona across the globe except in the U.S. The settlement also means that AB InBev will have complete access to the entire market in Mexico.