Justice Dept. OKs Beer Takeover With Slight Hiccup

Justice Dept. OKs Beer Takeover With Slight Hiccup

By LARA JAKES JORDAN and EMILY FREDRIX

Associated Press Writers

WASHINGTON (AP) -- The Justice Department approved a $52 billion beer buzz Friday, allowing Belgium-based InBev SA to buy out Anheuser-Busch and create the world's largest brewer.

But InBev's buzz comes with a slight hiccup: it must sell subsidiary Labatt USA before regulators let the deal go through.

That's because Anheuser-Busch Cos. Inc. beers Budweiser and Bud Light compete directly with Labatt Blue and Labatt Blue Light in upstate New York. Without the sell-off condition, the Justice Department said beer prices would increase in metropolitan Buffalo, Rochester, N.Y., and Syracuse, N.Y.

"This divestiture will ensure that consumers will continue to benefit from the significant competition between the merging companies in upstate New York," Deputy Assistant Attorney General Deborah A. Garza said in a statement.

InBev and Anheuser-Busch don't compete in most other beer markets around the country. InBev brews Stella Artois, Beck's and Lowenbrau. Anheuser-Busch dominates the U.S. beer market with about a 50 percent share, while InBev has a small fraction.

The Justice Department gave its blessing to the takeover just two days after Anheuser-Busch shareholders approved the sale. The deal, reached in July, is still subject to regulatory approval in Britain and China. InBev shareholders backed the deal in September.

Anheuser-Busch and AmBev, a subsidiary of InBev that owns Labatt Brewing Co. Ltd., said in separate statements Friday that the parties have satisfied the Justice Department's request to sell Labatt USA to a third-party licensee.

The companies did not name the licensee, or give the terms of that deal. They said the specifics of the deal with the licensee must be approved by the Justice Department.

Labatt Brewing, in Canada, will brew and supply the brands to a U.S. licensee for an interim period of three years, the companies said. The existing Labatt USA operations, which are based in Buffalo, N.Y., will be sold to the licensee. Anheuser-Busch said that would happen after its sale to InBev closes. It said a closing date has not yet been announced, "but the brewers expect to complete the transaction as promptly as practical."

The new company will be known as Anheuser-Busch InBev. It brings about the end of more than 150 years of family rule of the St. Louis-based Anheuser-Busch, though the newly combined company's North American headquarters will stay there.

InBev has said it will keep open all 12 of Anheuser-Busch's North American breweries.

August A. Busch IV, Anheuser-Busch's president and chief executive, will be on the new company's board but in a non-executive role. He has said decision to sell the nation's largest brewer was a difficult one.

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AP Business Writer Emily Fredrix reported from Milwaukee.

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