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DOJ Blocks Budweiser-Corona Beer Merger

The government worries that it will lower competition


The $20.1 billion acquisition of Mexico’s Grupo Modelo (PINK:GPMCY) by Anheuser-Busch InBev (NYSE:BUD) has hit a major roadblock.

On Thursday, the U.S. Department of Justice sued the companies in federal court, seeking to block the merger. The government contends that the deal would give the combined company almost half of the $80 billion-a-year beer market in the U.S., reducing competition, the Associated Press noted.

Anheuser-Busch to Unveil a New Beer at the Super Bowl
Anheuser-Busch to Unveil a New Beer at the Super Bowl

Despite the news, shares of Anheuser-Busch rose more than 2% in Friday morning trading.

The Justice Department argues that Anheuser-Busch, which produces Bud Light, the best-selling beer in the U.S., could raise prices in 26 metropolitan markets if the merger is completed. Corona Extra, made by Grupo Modelo, is the nation’s best-selling imported beer.

Negotiations between the companies and the government prior to the lawsuit had failed to reach an agreement to assuage the government’s concerns. Anheuser-Busch InBev announced plans to purchase Grupo Modelo last year.

Anheuser-Busch indicated that it would fight the lawsuit and planned to continue to pursue the merger.

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