AB InBev: DOJ challenges Modelo acquisition
BUY, Fair Value EUR75 (+17%)
The US Department of Justice launched a legal challenge to AB InBev’s proposed acquisition of Modelo based on the analysis that it would increase beer prices for the US consumer. The share prices of ABI and Modelo tumbled yesterday by 8%, which is what we calculate the negative impact on EPS. However, we believe that the deal is going to go ahead in one form or another. And if it does not, the large cash generation of the company will be used to make the ultimate big SABMiller acquisition, where a full divestment of the MillerCoors business would not pose any US DOJ obstacles. Hence we would take the opportunity to buy ABI today.
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