The new head of the Antitrust Division, Assistant Attorney General Bill Baer, has just won a big concession in his first major case, one that pits him against predecessor Christine Varney: the Department of Justice’s lawsuit to stop Anheuser-Busch InBev’s $20 billion acquisition of the giant Mexican brewer Grupo Modelo.
Apparently persuaded that DOJ is deadly serious, Anheuser-Busch InBev announced on Thursday that it is offering to sell the rights to Corona and other Grupo Modelo beers in the United States to Constellation Brands, the world’s largest wine company, for $2.9 billion. The announcement also made clear that Anheuser-Busch InBev is determined not to abandon the benefits of the deal, as its chief executive, Carlos Brito, underlined in an interview with The New York Times.
“We decided to restructure the transaction to address the concerns from the Justice Department,” Brito told The Times. “We are focused on getting this to the finish line.”
In a joint release, Constellation and Anheuser-Busch InBev seemed to invite the DOJ to make the next move. “We believe this revised agreement addresses all of the concerns raised by [DOJ],” the release said, “leaving no doubt about Constellation’s Crown beer division’s complete independence and ability to compete.”
But the DOJ promised only to give the proposed revised deal a good look, The Times said, quoting a DOJ spokeswoman as saying department lawyers would also “continue to prepare for litigation.”
If the restructured deal goes through, it will give Anheuser-Busch InBev access to the growing Mexican beer market, while giving Constellation Brands greater opportunities in the United States. While Constellation Brands may not be a name instantly familiar to consumers, anyone who drops by a liquor store now and then will recognize some of Constellation’s labels: Robert Mondavi, Clos du Bois, Ruffino and many others.
Anheuser-Busch InBev, whose Budweiser wagons are drawn by strutting Clydesdales in television ads, acquired the “InBev” portion its name in 2008, when Anheuser was bought by the Belgian InBev (Stella Artois, Bass, etc.) for $52 billion.
When the DOJ announced its lawsuit two weeks ago, Anheuser-Busch InBev vowed to fight it “vigorously,” as Main Justice reported. The beer titan’s change of heart seemed to be reflected in Brito’s comment that the revised proposal “preserves the merits of the Grupo Modelo transaction” and will allow his company to capture “approximately $1 billion of synergies, up from our original estimate of $600 million.”
Rob Sands, president and chief executive of Constellation Brands, sounded thrilled in the joint statement as he called the revised agreement “transformational” for his company.
But all the good feeling may be disappointing for those who hoped to see Baer duel Varney a former head of the Antitrust Division. As a partner at Cravath, Swain & Moore, she is representing Grupo Modelo. On the other hand, the DOJ said it is still gearing up for a fight, if it comes to that.