UPDATE 1-AB InBev says Modelo bid for damages dismissed

* Arbitrator rules against Modelo’s $2.5 bln claim-InBev

* Could pave way for AB InBev to buy rest of Modelo-analysts

* Remaining 50 pct could cost $11-13 bln

(Adds shares, analysts’ comments)

By Philip Blenkinsop

BRUSSELS, July 12 (BestGrowthStock) – Anheuser-Busch InBev (ABI.BR: ),
the world’s largest brewer, said on Monday a New York
arbitration panel has ruled that its ownership of a 50 percent
stake in Grupo Modelo (GMODELOC.MX: ) is legitimate, dismissing
the Mexican beermaker’s $2.5 billion claim.

Ending the dispute could open the way to AB InBev taking an
increased stake in Modelo, Mexico’s largest brewer and producer
of the Corona brand, analysts say.

AB InBev shares were 0.5 percent higher at 41.43 euros at
1000 GMT, when the Stoxx 600 European food and beverage index
(.SX3P: ) was up 0.1 percent.

Modelo filed for arbitration in October 2008 during InBev’s
$52 billion acquisition of Anheuser-Busch, which owned 50
percent of Modelo, claiming it was not consulted about the
takeover. Last year AB InBev said Modelo was also demanding $2.5
billion in damages.

Analysts said the news was positive in removing the prospect
of it having to pay damages, but also wondered how the two
companies would cooperate in future. Few expected an immediate
takeover deal.

Andrew Holland of Evolution Securities said in March that AB
InBev was likely to announce this year that it would be
acquiring the rest of Modelo. On Monday, he said he believed it
at least made sense now for both parties to meet for talks.

“I have no doubt that AB InBev would like to do the deal.
The intention of the (Modelo) controlling shareholders is not
clear,” he said, adding the price for the remaining 50 percent
was likely to be between $11 billion and $13 billion.

AB InBev’s 50.2 percent equity stake gives it 44 percent of
the voting rights. The remaining 56 percent of such rights are
in the hands of Modelo’s controlling families.

As a growth market, Mexico would accelerate increases in
volumes and revenue for AB InBev, which would inevitably also
seek cost savings at Modelo.

Modelo’s key shareholders may now be inclined to do a deal
assuming competition hots up following Heineken’s (HEIN.AS: )
purchase of the beer business of main rival FEMSA (FMSAUBD.MX: ).

AB InBev, maker of Budweiser, Stella Artois and Beck’s, said
in a statement that the panel had awarded no damages or

“Anheuser-Busch InBev is grateful to the panel for
clarifying that there has been no breach of the investment
agreement and looks forward to continuing its successful
business relationship with Grupo Modelo,” AB InBev said.
(Editing by Greg Mahlich)

UPDATE 1-AB InBev says Modelo bid for damages dismissed