Anheuser-Busch InBev, the world's biggest brewer, is to buy the half of Mexican group Modelo it does not already own for $20.1 billion, the latest big deal by brewers looking for growth in emerging markets.
The owner of Budweiser and Stella Artois beers said on Friday it had reached agreement with Grupo Modelo's controlling families to secure a leading position in a growing domestic beer market and capture best-selling Mexican beer Corona Extra.
Modelo, founded in 1925, is Mexico's biggest brewer with a 50 percent-plus market share in a virtual duopoly with Heineken's FEMSA Cerveza in the world's fourth most-profitable beer market. Corona is the biggest imported beer in the lucrative U.S. market.
AB InBev is attracted to Modelo by a Mexican beer market growing at about 3 percent and cost savings it said would be at least $600 million annually after four years, plus a further one-off $500 million of cashflow gains.
AB InBev said it had added $14 billion of new bank loans to fund the all-cash transaction, adding that it would reduce its net debt/core profit (EBITDA) ratio to 2.0 times during 2014.
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