Divestitures Likely in Modelo Deal-WSJ

The Belgian brewer Anheuser-Busch Inbev’s possible acquisition of the remainder of Grupo Modelo is quite likely to draw antitrust scrutiny, as the combined company would control in excess of 50% of the U.S. beer market.  While the company could divest some of its inferior brands to offload market share, the costs of doing so should be strenuously considered.  While it does seem that Inbev is paying a relatively high price for Modelo, the assets are exceptional, and the management team at Inbev has a track record for cutting fat, and improving margins.  I’d certainly give them the benefit of the doubt on this acquisition.  I believe that additional distribution of Modelo’s portfolio will have a tremendous impact on boosting market share especially for brands such as Model Especial. Hopefully for Inbev’s sake this doesn’t turn in to a costly production where ultimately the deal falls apart do to antitrust issues like the AT&T and T-Mobile deal did.