Grupo Modelo May Not Move The Needle For Anheuser-Busch InBev

Anheuser-Busch InBev SA/NV (NYSE: BUD) is bucking the broad market’s sell-off today on word that it is in talks to acquire the remaining stake of Mexican beer giant Grupo Modelo.  The shares were briefly halted for the company to address the speculation, but the reaction so far may be a bit disappointing.

Anheuser-Busch InBev simply noted that it routinely considers a variety of strategic options to create value for its shareholders and that there have been discussions between the company and Grupo Modelo over a possible transaction to expand its current relationship. AB, or Bud, further said that these discussions may or may not lead to a transaction and any speculation on terms and conditions is premature as there has been a long history of partnership between these two players.

In short, “We are talking but we won’t tell you anything further.”  If this was really great news we would expect more of a reaction to the upside even if the small gain was on a down day for the market.  The rumor of the size was $10 billion to $12 billion, and Bud’s market cap is over $112 billion according to Yahoo! Finance.  Grupo Modelo brands include Corona, Modelo, Negra Modelo, Tropical, Pacifico and others.  It also has water brands as well under Gerber, Nestle, Perrier, Pellegrino and others.

It is sad when a $10 billion or $12 billion deal does not even scratch the surface. Anheuser-Busch InBev shares are up almost 1% at $70.97 and the 52-week range is $49.05 to $75.08.

JON C. OGG