Mexico's Modelo should warm to new partner InBev

By Chris Aspin - Analysis

MEXICO CITY (Reuters) - Mexican brewer Modelo should eventually embrace InBev NV's $52 billion takeover of its U.S. partner Anheuser-Busch Cos Inc and down the road might strengthen the ties with a new U.S. distribution deal.

Modelo, maker of Corona beer and 50 percent owned by Anheuser, said early Monday that it was in talks with InBev on how the companies could work together -- should Modelo decide not to exercise its contractual rights to keep Belgium's InBev from becoming a minority owner of Modelo by buying Anheuser.

Analysts said Modelo is not expected to try to block the takeover that would create the world's top brewer. InBev Chief Executive Officer Carlos Brito said he sees no impediment to the deal from Modelo and sees a "great partnership" between the Belgian and Mexican brewers.

"If I had to make a prediction, I would guess that after a relatively short period of time they (Modelo) are going to accept the new status quo, which in some ways is the old status quo," said Steve Dixon, manager of Global Beverage Fund at Arnhold & S. Bleichroeder in New York.

But analysts say that Modelo will still fiercely defend its independence and will not sell control to InBev, which also is in no financial position to persuade the family-run Modelo board to sell its estimated $8 billion stake.

"I do not think that they (InBev) are in a position to make a very attractive offer for Modelo. I see it as very unlikely," said Vector brokerage analyst Laura Herrera. "Moreover, Modelo does not want to sell."

Modelo's Chairman and CEO Carlos Fernandez told Reuters last month -- just before InBev launched its bid for Anheuser -- that he expected the maker of Negra Modelo and Victoria beers to remain in Mexican hands.

Antonino Fernandez, Carlos Fernandez's uncle and family patriarch, controls Modelo's family voting trust. Analysts say the trust is determined that Modelo remain independent despite the consolidation in the global beer industry and the potential rich pickings from selling out.