AB InBev may need to sell brewery to end lawsuit

Anheuser-Busch InBev may have to give up more control of beer distribution in the United States, or even sell a brewery to settle an antitrust lawsuit to block its US$20.1 billion takeover of the rest of Grupo Modelo SAB.

US regulators and AB InBev are proceeding with talks on the Department of Justice's objections to the deal, according to people familiar with the matter. The company now must decide whether to give the government more concessions, fight the lawsuit in court, or walk away from the deal, 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 both firms plunged after the justice department filed its complaint with the Federal Court in Washington on Thursday. The government argued the transaction violates antitrust law because it would eliminate the "substantial head-to-head competition" between AB InBev and Modelo and "diminish ABI's incentive to innovate".

AB InBev was unwilling to sell Modelo's newest state-of-the-art beer bottling plant, located near Piedras Negras, Mexico as a concession to win approval, two people familiar with the matter said last month. Selling the plant would take the supply of Corona in the US out of AB InBev's hands, reducing the likelihood the brewer could control Corona prices.

Any requirement to sell the brewery would be a deal-breaker, said the people at the time, asking not to be named because the matter wasn't public.