By The Huffington Post News Editors
— Anheuser-Busch InBev reached a final agreement with the Department of Justice, settling a dispute over its $20.1 billion acquisition of the Mexican brewer, Grupo Modelo.
The world’s largest brewer has been trying since June to buy the half of Grupo Modelo that it doesn’t already own. The Justice Department blocked the deal out of concern that a company that massive would stifle competition in the U.S.
By Nicole Seghetti, The Motley Fool
Filed under: Investing
Wine maker Constellation Brands released earnings on Wednesday. The stock initially dropped on the announcement, but there’s one detail from the earnings call that shouldn’t be overlooked. Let’s quickly recap the results. Then we’ll dive into the must-know nugget of information.
Results recap
Constellation Brands delivered full-year 2012 revenues and profits that beat Wall Street expectations. Carving out acquisitions, net sales increased 3%, powered by double-digit growth for its popular Robert Mondavi and Black Box brands. The crown jewels of the company’s Crown Imports joint venture — Modelo Especial, Corona Light, Negra Modelo, and Pacifico brands — enjoyed record sales for the year.
Beer war beneficiary
In mid-2012, Anheuser-Busch InBev agreed to sell its 50% stake in the Crown Imports joint venture to Constellation, giving Constellation complete control of Crown and rights for Grupo Modelo brands in the U.S.
Key brands in the deal include Corona, the U.S.’ leading import beer, and Modelo Especial, Mexico‘s premium beer brand, which has enjoyed double-digit growth annually for nearly the past two decades. With the goal of growing the Grupo Modelo brand to 100 million cases from the 35 million sold in 2011, Constellation’s management projects the “transformational” deal will double its annual revenues.
However, in February, the Department of Justice blocked the deal, debating that AB InBev would have too much pricing control if the deal passed. But just a couple of weeks later, Constellation’s nearly $3 billion purchase of Grupo Modelo’s Piedras Negras brewery in Mexico seemed to satisfy the DOJ. As a result, Constellation shares jumped on the news.
Now that the deal is back on, investors are looking for any clues as to what might happen next, making one nugget of information from the earnings release so critical. Constellation CEO Rob Sands stated in Wednesday’s call, “We’ve reached two key milestones for regulatory approvals for the transaction including an agreement in principle with the U.S. Department of Justice and unanimous approval by the Mexican Antitrust Commission.” This update is exactly what Constellation investors had been hoping for.
Foolish bottom line
This Grupo Modelo deal comes at an important time for Constellation. Constellation is mostly a wine company with a smaller spirits and beer portfolio, so the company stands to benefit handsomely from diversification of its revenue streams. Constellation’s stock price increased a meteoric 70% in 2012, but investors are wondering if that type of growth can continue. However, this recent nugget of information has Constellation investors hopeful that its star will continue to burn brightly.
The global beer industry has undergone massive consolidation during the past few years. Boston Beer‘s Samuel Adams brand helped to redefine beer and kick off the U.S.’ craft beer revolution. Success breeds competition, though, and while just a few years ago Boston Beer had claim over most of the craft beer shelf, today the field is crowded. Can Boston Beer rise above the rest, or
From: http://www.dailyfinance.com/2013/04/11/1-critical-detail-in-constellations-earning-releas/
By Dan Caplinger, The Motley Fool
Filed under: Investing
Spring is finally here, and a new earnings season is getting under way. On Wednesday, Constellation Brands will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Constellation Brands has been at the center of the frenzy of consolidation that’s been going on in the beer, wine, and spirits industry recently. Can the company hold its own against increasingly tough competition on a number of fronts? Let’s take an early look at what’s been happening with Constellation Brands over the past quarter and what we’re likely to see in its quarterly report on Wednesday.
Stats on Constellation Brands
|
Analyst EPS Estimate |
$0.45 |
|
Change From Year-Ago EPS |
(35%) |
|
Revenue Estimate |
$667 million |
|
Change From Year-Ago Revenue |
6.1% |
|
Earnings Beats in Past 4 Quarters |
4 |
Source: Yahoo! Finance.
Can Constellation Brands lift investors’ spirits this quarter?
Analysts have gotten more optimistic about Constellation’s earnings prospects in recent months, as they’ve lifted their estimates both for the just-ended quarter and for the entire 2013 fiscal year. That optimism has definitely shown up in Constellation’s share price, as the stock has risen 35% just since the beginning of the year.
For almost a year now, Constellation has been dealing with the changing prospects of Anheuser-Busch‘s attempts to buy Grupo Modelo. To avoid antitrust concerns, Anheuser-Busch had agreed to sell its stake in the Crown Imports joint venture to Constellation, giving it complete control of Crown Imports. Moreover, the deal would also have allowed Constellation to import Corona and Modelo Especial.
Since it was initially proposed, the Grupo Modelo deal has gone through big ups and downs. In early February, the Justice Department blocked the deal, arguing that Anheuser-Busch would have too much pricing control if the deal went through. Yet just a couple of weeks later, a new agreement that added in Constellation’s taking over Grupo Model’s Piedras Negras brewery for $2.9 billion seemed to satisfy the Justice Department, and shares soared as the deal appears to be back on.
Nevertheless, Constellation Brands hasn’t been standing still waiting for Anheuser-Busch to figure out how to get its deal done. Last month, Constellation moved forward with a distribution deal with Brazil’s Interfood Importacao, whereby the local company will offer Robert Mondavi wine, Svedka vodka, and other products throughout the South American giant. The move is just the latest in Constellation’s attempts to bolster its emerging-market presence.
In its earnings report, watch for Constellation to report on the status of the Anheuser-Busch deal as well as its other strategic moves. If the deal finally gets done, the future looks …read more
Source: FULL ARTICLE at DailyFinance
By The Huffington Post News Editors
MEXICO CITY, April 7 (Reuters) – An accident at a Mexico City brewery killed seven people early Sunday, Corona beermaker Grupo Modelo said.
The accident happened in a tank that was undergoing maintenance and cleaning, a spokeswoman for the company said in a statement. No details were provided.
Grupo Modelo said it has informed authorities and has begun investigating the accident.
Source: FULL ARTICLE at Huffington Post
By Nathaniel Parish Flannery, Contributor
Seven people died in a workplace accident at Mexico City brewery owned by Grupo Modelo, the producer of the Corona line of beers. The workers died while cleaning a tank inside the facility. Jennifer Shelley, a spokeswoman for the Mexico City-based company said in a statement that the deaths occurred in “a confined area of a tank in which cleaning and maintenance work was being done.” The company announced that it is investigating the incident and has already contacted authorities in Mexico. “We are carrying out the corresponding investigations to find out the causes of the accident,” Grupo Modelo said, in a statement. …read more
Source: FULL ARTICLE at Forbes Latest
Mexico City authorities say seven workers died while cleaning a tank at a Grupo Modelo brewery in Mexico City.
A spokeswoman for city prosecutors says the accident occurred early Sunday and that investigators are looking into whether the workers died from inhaling toxic fumes. The official spoke on condition of anonymity because she was not authorized to discuss the case.
Plant manager Francisco Lopez Bravo told local media the workers were trapped inside the cistern while doing maintenance work.
Lopez Bravo said there are no other risks at the brewery and that it continued to operate on Sunday.
Anheuser-Busch InBev has been trying since June to take over the half it doesn’t already own of Grupo Modelo, which makes Corona and other globally popular beers.
Source: FULL ARTICLE at Fox World News
Mexico City authorities say seven workers died while cleaning a tank at a Grupo Modelo brewery in Mexico City.
A spokeswoman for city prosecutors says the accident occurred early Sunday and that investigators are looking into whether the workers died from inhaling toxic fumes. The official spoke on condition of anonymity because she was not authorized to discuss the case.
Plant manager Francisco Lopez Bravo told local media the workers were trapped inside the cistern while doing maintenance work.
Lopez Bravo said there are no other risks at the brewery and that it continued to operate on Sunday.
Anheuser-Busch InBev has been trying since June to take over the half it doesn’t already own of Grupo Modelo, which makes Corona and other globally popular beers.
Source: FULL ARTICLE at Fox World News
By Rich Duprey, The Motley Fool
Filed under: Investing
Despite the progress made with the Justice Department, Anheuser-Busch InBev could be left bereft if a new lawsuit blocks its attempt to acquire the remaining stake in Mexican brewer Grupo Modelo that it doesn’t already own.
Last Friday nine consumers filed a lawsuit seeking to stop the $20 billion merger, arguing it would significantly reduce competition and would allow Anheuser-Busch and No. 2 brewer MillerCoors to collude to raise prices. The filing says the combination would give Anheuser-Busch 54% of the market in the U.S., and with its rival owning another 30%, the two would control between 85% and 95% of the market.
The attorney that rounded up the nine affronted plaintiffs is the same one that attempted to block the merger of Anheuser-Busch and InBev in 2008.
100 bottles of beer on the wall
The Justice Department had its own concerns over allowing the deal to go through, and to alleviate the anti-competitive fears, Anheuser-Busch agreed to sell Modelo’s Piedras Negras, Mexico, brewery and grant perpetual brand licenses to Constellation Brands for $2.9 billion.
Additionally, Modelo’s U.S. business would be completely divested to ensure independence of supply for Crown Imports, which is currently jointly owned by Modelo and Constellation. It would also sell to Constellation the 50% piece of Crown currently owned by Modelo to give it complete control of the production of the brands for marketing and distribution in the United States.
Anheuser-Busch briefly addressed the new lawsuit in its annual report filed this past Monday, noting that even if all the brewers, distributors, and Justice Department lawyers came to an agreement on the merger, the court in this private action lawsuit could delay it further or even kill it.
One of the concerns the new lawsuit apparently has is that despite selling Modelo’s half of Crown Imports to Constellation, the deal only creates a “facade of competition” because Constellation would still be reliant upon Anheuser-Busch for the beer.
Yet that was one of the concerns the Justice Department originally had, and it led Anheuser-Busch to amend its original proposal to include the Piedras Negras brewery. As Constellation’s president and CEO said at the time, it gives the distributor perpetual rights to the Corona and Modelo brands as it will have “autonomous control of production, distribution, marketing, and promotion” in the U.S.
No doubt the Justice Department has already addressed the many concerns the new lawsuit raised, and though the deal would create a massive brewing giant, it’s also true that Bud needs some new ways to juice sales. Beer volumes have been fairly anemic, rising just 0.1% in 2012 as craft breweries gained momentum. Just because you’re the biggest doesn’t mean you’ve got control over drinkers’ tastes, and it doesn’t guarantee frothy prices, either.
Raise your glass
When it comes to craft beer, Boston Beer’s Samuel Adams brand helped to kick off the craft beer revolution in the United States and redefine the beverage itself. Success breeds competition, though, and while just a few years …read more
Source: FULL ARTICLE at DailyFinance
By Rich Duprey, The Motley Fool
Filed under: Investing
Citing significant progress made in joint talks over its proposed acquisition of Grupo Modelo, brewing giant Anheuser-Busch InBev said all the parties, including the Justice Department, jointly asked the court to extend a stay due to expire March 19, as they will probably complete their negotiations.
Anheuser-Busch, which is trying to acquire the remaining 50% stake in the Mexican brewer it doesn’t already own for $20.1 billion, originally agreed to sell Modelo’s existing 50% interest in Crown Imports to co-owner Constellation Brands , but the FTC objected because of antitrust and anti-competitiveness concerns.
AB InBev subsequently modified the proposal and agreed to sell Compania Cervecera de Coahuila, Grupo Modelo‘s brewery in Piedras Negras, Mexico, and grant perpetual brand licenses to Constellation for $2.9 billion. Modelo’s U.S. business would be completely divested to ensure independence of supply for Crown Imports. It would also provide Constellation with complete control of the production of the Modelo brands for marketing and distribution in the United States.
AB, Grupo Modelo, Constellation, Crown, and Justice have been in discussions to resolve the antitrust concerns. They requested that the court extend the stay until April 9. If the parties reach an agreement, they will file a proposed consent judgment and related documentation with the court, though Anheuser-Busch InBev offers a reminder that it cannot guarantee the discussions will be successful.
The article Anheuser-Busch InBev Pronounces Progress in DOJ Suit originally appeared on Fool.com.
Fool contributor Rich Duprey and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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Source: FULL ARTICLE at DailyFinance
By Dan Caplinger, The Motley Fool
Filed under: Investing
Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Brown-Forman is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
The spirits business is generally seen as recession-proof, and Brown-Forman is a big player in the space. But can the company keep up with the rapid pace of consolidation in the industry? Let’s take an early look at what’s been happening with Brown-Forman over the past quarter and what we’re likely to see in its quarterly report on Wednesday.
Stats on Brown-Forman
|
Analyst EPS Estimate |
$0.70 |
|
Change From Year-Ago EPS |
13% |
|
Revenue Estimate |
$1.03 billion |
|
Change From Year-Ago Revenue |
7.3% |
|
Earnings Beats in Past 4 Quarters |
2 |
Source: Yahoo! Finance.
Will Brown-Forman make investors feel happy this quarter?
Analysts have stood their ground on Brown-Forman over the past few months, keeping their earnings estimates stable on the company. But the stock hasn’t been as fortunate, having lost 6% since early December.
Brown-Forman isn’t a name most people know, but its Jack Daniel‘s brand is the fifth largest spirits brand and has the highest sales volume of any American whiskey in the world. The company also has other premium spirits, including Finlandia vodka, which has enjoyed strong growth in emerging markets and is the top imported vodka in Russia.
Brown-Forman has tried to promote growth through new product innovations, especially in areas like flavored whiskey, where the company has dominant market share over competitors Diageo and Beam despite their having introduced their own flavored-spirits variants. But merger and acquisition activity has also risen in the industry, with Anheuser-Busch seeking to find a way to make its buyout of Grupo Modelo pass regulatory muster that will involve spirits and beer maker Constellation Brands.
What makes Brown-Forman stand out is its attitude toward not just its investors but all of its stakeholders. The company made the Fool’s list of the 25 best companies in America in part because of its spurring of responsible drinking initiatives, corporate giving, and positive employee experience.
In its quarterly report, watch closely for Brown-Forman to discuss the impact of growth moves like its decision to establish a distribution company in France as of the beginning of 2014. Signs that Europe may be rebounding would only be good news for Brown-Forman in its quest for faster global growth.
The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool’s free report “3 …read more
Source: FULL ARTICLE at DailyFinance
WASHINGTON (Reuters) – The U.S. Justice Department and Anheuser-Busch InBev , which have been embroiled in a court fight over whether AB InBev can expand its stake in Mexican brewer Grupo Modelo, asked a court on Wednesday for a short delay as the two sides hold settlement talks. AB InBev, the world’s largest brewer, has 200 brands ranging from big names like Budweiser and Stella Artois to craft-style beers like Shock Top and Goose Island. AB InBev wants to buy the 50 percent of Modelo it does not already own for $20. … …read more
Source: FULL ARTICLE at Yahoo Business
The U.S. Department of Justice is talking with beer makers Anheuser-Busch InBev and Grupo Modelo about potentially resolving a legal challenge to their $20.1 billion deal. …read more
Source: FULL ARTICLE at Yahoo Business
By Anne Marie Kelly, Contributor
At a time when the United States is awash in beer—with a record high of some 2,750 individual brewers, per the Beer Institute—the government wants to block a merger that would hand one company 46% of the market. The major brands involved—the true-blue American Budweiser and the more upscale Corona from Mexico—would share the same corporate parent if Anheuser-Busch InBev were allowed to acquire the half of Grupo Modelo that it doesn’t already own. …read more
Source: FULL ARTICLE at Forbes Latest
Anheuser-Busch InBev could salvage its plan to take full control of Grupo Modelo by keeping its sights on the lucrative market in Mexico and letting others brew Corona destined for the United States.
Source: FULL ARTICLE at Fox Business Headlines
Source: FULL ARTICLE at Newser – Home
The U.S. Justice Department has filed a lawsuit seeking to stop Anheuser-Busch Inbev SA from buying the half of Mexican brewer Grupo Modelo that it does not already own.
Source: FULL ARTICLE at Fox Business Headlines
Lazard Ltd and Morgan Stanley risk losing up to $33 million in advisory fees if the U.S. government is successful in stopping Anheuser-Busch InBev SA from buying the half of Mexican brewer Grupo Modelo that it does not already own.
Source: FULL ARTICLE at Fox Business Headlines
