Mexico: Modelo's chief unaware of Anheuser-Busch plan to sell 50% stake

Mexico's Modelo is unaware of any plan by U.S. partner Anheuser-Busch Cos. Inc. to sell its 50 percent stake in the brewer of Corona beer, Modelo's chairman said on October 11, Reuters accordingly released.

Asked if the companies were in talks, Modelo Chairman Carlos Fernandez, who is a member of the U.S. brewer's board and part of the family that controls Modelo, said: "Not that I know of, and I ought to know if there were something."

Shares of Anheuser-Busch, which brews Budweiser, rose 2 percent October 10 to one-month highs, as investors weighed the possibility that the No. 1 U.S. brewer could be bought out by Edward Lampert, the activist investor who controls retailer Sears Holdings Corp. Its shares gave back 1.35 percent on Wednesday.

Some analysts suggested Anheuser-Busch or a future owner could sell its 50 percent stake in Modelo back to the Mexican brewery's controlling family in order to reduce its $7.8 billion debt load.

Modelo, which is debt free and also has more than $1 billion of cash on its books, exports Corona around the world and the beer is the top import in the United States ahead of Heineken's premium brand.

If Modelo's controlling family were to buy back Anheuser-Busch's 50 percent stake, they would likely have to offer the same terms to smaller shareholders.

"We believe that minority investors of Grupo Modelo would not suffer if Modelo was willing to pay its 50-percent partner a fair market value for the stake," Bear Stearns said in a report October 11. But Modelo's Fernandez, who is also chief executive of the Mexican brewer, told reporters he heard of the market talk October 11. "But besides that news I do not know anything."

Modelo shares rose 3.04 percent the same day to 49.50 pesos after a similar increase on Tuesday.

Anheuser-Busch, which controls about half the U.S. beer market, also brews Bud Light and Rolling Rock.

In Mexico, Modelo competes against No. 2 brewer Femsa, which makes the Tecate and Sol beers. The two have a virtual duopoly. Imports amount to a trickle and the only other beermakers are microbreweries.

Separately, Modelo's Fernandez said he expected 2006 exports to grow more than 10 percent over last year and domestic volumes to increase by 3.5 percent to 4 percent.

"In the export market we continue to have very important growth levels and we are opening new markets," he said. Market consensus had forecast exports to rise around 8 percent.

Fernandez said that sales volume in the third quarter could be moderately up compared with year-ago results.

"We will be slightly up, with a rising trend, but growth will be moderate," Fernandez said.

"Obviously, there was some impact from the rain, the weather, but we can be satisfied that under the conditions, from the hurricanes that hit in some zones, shipments in Mexico were good," he said.

Parts of Mexico were hammered by Hurricanes John and Lane and other storms during the third quarter, which would have dented beer drinking.

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