InBev may need to sell brewery to end suit

, Daily Business Review

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Anheuser-Busch InBev NV may have to give up more control of U.S. beer distribution or even sell a brewery to settle an antitrust lawsuit by the U.S. to block its $20.1 billion takeover of the rest of Grupo Modelo SAB.

AB InBev, the world's biggest brewer, and U.S. regulators are proceeding with talks on the Justice Department's objections to the deal, according to people familiar with the matter. The Leuven, Belgium-based maker of Budweiser must decide whether to give more concessions to the government, fight the lawsuit in court, or walk away from the transaction, said Herbert Hovenkamp, who teaches antitrust law at the University of Iowa.

"It's a tiny percentage that go to trial," Hovenkamp said. "More often than not, the parties identify some assets that can be spun off."

Shares of AB InBev, which controls almost half the U.S. beer market, and Modelo, Mexico's biggest brewer, plunged after the Justice Department filed its complaint yesterday in federal court in Washington. The government argued the transaction violates antitrust law because it would eliminate the "substantial head-to-head competition" between the companies and "diminish ABI's incentive to innovate."

The department acted yesterday as a deadline was looming to end its investigation and because the suit allows the government to keep its options open, according to a person familiar with the matter, who asked not to be identified because the process is private. The parties haven't fallen into intractably hostile camps, that person said.

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