Anheuser-Busch InBev, today agreed to buy the remaining 50 per cent stake that it does not already own in Mexican Corona beer maker Grupo Modelo for $20.1 billion, as the global beer industry moves into the final stages of consolidation.

The owner of Budweiser and Stella Artois beers has offered to pay $9.15 per share in cash, a premium of around 30 per cent to the 22 June 2012 closing price of Grupo Modelo's series C shares.

Anheuser-Busch InBev holds a 50-per cent non-controlling stake in Modelo, but has 43.9 per cent of Modelo's voting shares, while the rest is held by the descendants of Modelo's founder and other closely-tied Mexican families in a trust.

Anheuser-Busch InBev inherited the stake through its $52-billion acquisition of US brewer Anheuser-Busch in 2008 by Belgium-based InBev NV. (See: InBev acquires Anheuser-Busch for $52 billion; Budweiser to be flagship brand)

Under the deal, Diblo, S.A. de C.V., the holding company for Grupo Modelo's operating subsidiaries, and Direccion de Fabricas (DIFA), S.A. de C.V., a glass bottle manufacturer in Mexico with output largely dedicated to Grupo Modelo, will merge into parent Grupo Modelo for newly issued Grupo Modelo shares.

Post merger of Diblo and DIFA, Anheuser-Busch InBev will commence an all-cash tender offer for all of the outstanding shares it does not already own in Grupo Modelo for $20.1 billion.

The total enterprise value of Grupo Modelo is estimated at approximately $32.2 billion, comprising the value of the tender offer, the value of Anheuser-Busch InBev's existing stakes in Grupo Modelo and Diblo as well as cash balances and minority interests.

In a separate transaction, Grupo Modelo will sell its existing 50 per cent stake in Crown Imports, the joint venture that imports and markets Grupo Modelo's brands in the US, to Constellation Brands for $1.85 billion, giving Constellation Brands 100 per cent ownership of the JV.

As a result, Grupo Modelo's brands will continue to be imported, marketed and distributed independently in the US through Crown Imports on the existing financial terms, while Anheuser-Busch InBev will continue to supply Modelo's beer brands.

The merger is expected to yield annual synergies of at least $600 million, said Anheuser-Busch InBev in a statement.

Anheuser-Busch InBev, based in Leuven, Belgium, said that it has fully committed financing to fund the deal by adding $14 billion of additional bank facilities to existing liquidity through a new facility agreement which gives it an $8 billion three-year term facility and a $6 billion term facility with a maximum maturity of two years from the funding date.

Anheuser-Busch InBev now has total liquidity, comprising of cash and long-term committed facilities, in excess of $24 billion.

According to analysts, Anheuser-Busch InBev may have to sell off assets to ward off anti-trust concerns since it already holds nearly half of the US beer market.

Founded in 1925, Mexico City-based Modelo is the country's largest beer brewer with a 58-per cent market share, and the sixth largest brewer worldwide. It has eight brewing facilities in Mexico, with a total annual installed capacity of 70 million hectoliters.

With flagship brand like the Corona Extra, Modelo has been the top exporter of beer to the US, dethroning Heineken in 1997. Its other brands include Modelo Especial, Corona Light, Negra Modelo, Victoria, Estrella, Leon and Pacífico.   

It exports six brands and is present in more than 180 countries. It imports Anheuser-Busch InBev's products in Mexico, including Budweiser, Bud Light and O'Doul's. It also imports the Chinese Tsingtao brand and the Danish beer Carlsberg.

Through a strategic alliance with Nestlé Waters, it produces and distributes in Mexico the bottled water brands Sta Maria and Nestlé Pureza Vital, among others.

The Mexico Stock Exchange-listed brewer has a market value of around $23 billion, and posted net income of 18.4 billion pesos ($1.33 billion) in 2011, on revenues of 91.2 billion pesos ($6.58 billion), with sales outside Mexico having grown by 50 per cent over the past five years, accounting for 42 per cent of its 2011 revenues.

The combined company would lead the global beer industry with roughly 400 million hectoliters of beer volume annually and 2012 estimated revenues of $47 billion.

Its operations would span 24 countries and would bring together five of the top six and seven of the top ten most valuable beer brands in the world.

The combined company would increase Anheuser-Busch InBev's exposure to fast-growing developing markets, especially due to Modelo's dominant position in Latin America's second biggest economy and its US export market share.

''There is tremendous opportunity from combining two leading brand portfolios and further expanding Grupo Modelo's brands worldwide through Anheuser-Busch InBev's extensive global distribution network,'' said Carlos Brito, CEO of Anheuser-Busch InBev in the statement.

Modelo has developed Corona into the leading import beer in 38 countries and successfully markets the brand in more than 180 countries.

Beer industry consolidation

The world's top five brewers control nearly 50 per cent of the global beer market, with Anheuser-Busch InBev,  the world's largest brewer, with an 18 per cent global market share, followed by SABMiller Plc with 9.8 per cent, Heineken with 8.8 per cent, Carlsberg with 5.6 per cent and Kirin Holdings Co. with 4.8 per cent.

Falling beer consumption in Western Europe and the US, has forced the brewing giants to shift focus to emerging countries for growth, and have recently spent billions of dollars in mergers and acquisitions in order to expand in enraging markets in South America, Asia and the CIS countries.

After reducing its massive $56.5-billion debt incurred from the Anheuser-Busch acquisition by selling non-core assets, Anheuser-Busch InBev has once again hit the acquisition trail.

In April, Anheuser-Busch, whose flagship brand is the Budweiser beer, acquired a 51-per cent stake in Dominican brewer Cervecería Nacional Dominicana SA (CND) from two sellers for $1.237 billion.

In the same month, Canadian-American beer giant, Molson Coors Brewing Company, struck a deal to buy Central and East European brewer StarBev LP, owned by Anheuser-Busch, for €2.65 billion ($3.54 billion), in order to strengthen its foothold in Europe's emerging markets (See: Molson Coors to acquire European brewer StarBev for $3.54 bn)

Dutch brewer Heineken NV paid around $7 billion in 2010 for Femsa Cerveza, Mexico's second-largest beer maker after Modelo, while SABMiller Plc, the world's second-biggest brewer, acquired Australia's Foster's Group last year for about $10.2 billion (See: SABMiller's $10.2-bn acquisition of Foster's gets Australia's conditional approval).

Early this month, Carlsberg said it is planning to make acquisitions in Asia, and will invest $670 million in a brewery in China, the world's biggest beer market.