June 29, 2012 / 1:08 PM / 6 years ago

Constellation buying out Modelo beer importer

(Reuters) - Constellation Brands Inc will buy the 50 percent interest in Crown Imports that it does not already own for $1.85 billion as its joint venture partner Grupo Modelo is bought by Anheuser-Busch InBev.

Constellation, whose shares rose nearly 13 percent in premarket trading, also reported slightly better-than-expected quarterly profit on Friday and stood by its full-year earnings outlook.

The maker of Robert Mondavi and Ravenswood wines also said it plans to buy the Mark West pinot noir wine brand for $160 million.

AB InBev, the world’s biggest brewer, said on Friday it would buy the half of Modelo it does not already own for $20.1 billion.

In a separate transaction, AB InBev will sell Modelo’s stake in the Crown Imports joint venture to Constellation. The venture imports and distributes Modelo’s beers in the United States.

Analysts said the plan to sell Modelo’s stake in Crown was aimed at avoiding anti-trust concerns in the United States, where AB InBev already controls about 49 percent of the beer market. Adding the Corona import business would push its market share up by a further 5 percent.

Constellation said it had fully-committed bridge financing in place to complete the Crown Imports acquisition, and expects the deal to boost its ongoing diluted earnings per share and free cash flow.

The deal is expected to close during the first quarter of 2013.

Crown Imports contributed $215 million in equity earnings to the company in fiscal 2012, Constellation said in a statement.


Constellation said it earned $72 million in its fiscal first quarter ended May 31, down from $74.5 million a year earlier. On a per-share basis, earnings were 38 cents, up from 35 cents a year earlier, when there were more shares outstanding.

Excluding one-time items, Constellation earned 40 cents per share. On that basis, analysts on average were expecting 39 cents, according to Thomson Reuters I/B/E/S.

Net sales slipped to $634.8 million from $635.3 million.

Constellation shares rose to $24.50 in premarket trading from a close on Thursday at $21.76 on the New York Stock Exchange.

Reporting by Martinne Geller in New York; Additional reporting by Balaji Sridharan in Bangalore; Editing by Jane Merriman and John Wallace

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