Justice Department approves purchase of Anheuser-Busch

WASHINGTON -- The Justice Department approved InBev SA's $52 billion buyout of Anheuser-Busch on Friday, a deal that will create the world's largest brewer.

However, InBev must sell subsidiary Labatt USA to win regulatory approval.

Labatt Blue and Labatt Blue Light have less than 1 percent share of the U.S. market, but in upstate New York they go head-to-head with Anheuser-Busch Cos. Inc.'s Budweiser and Bud Light, and MillerCoors LLC brands like Coors Light and Miller Lite.

Without the sell-off condition, the Justice Department said beer prices would increase in metropolitan Buffalo, N.Y., Rochester, N.Y., and Syracuse, N.Y. due to lessened competition.

"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, where Anheuser-Busch is the dominant player with a 50 percent share. InBev, brewer of Stella Artois, Beck's and Lowenbrau, has less than 2 percent the U.S. market, regulators said.

The Justice Department's blessing to the takeover comes 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, 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."

Labatt's is one of the top beer brands in Canada, but in the U.S. it has less than 1 percent market share, said Eric Shepard, executive editor of trade publication Beer Marketer's Insights, based in Nanuet, N.Y. Sixty-percent of its U.S. sales are in New York state, he said. Federal regulators estimated that half of Labatt's U.S. sales are to customers in Buffalo, Rochester and Syracuse.

"Clearly they looked at upstate New York and said this is going to be too high a share," Shepard said of regulators.

If InBev didn't sell its Labatt USA interest, then those three areas would see about 70 percent of their beer markets controlled by what's to be called Anheuser-Busch InBev and rival MillerCoors, a joint venture between SABMiller's U.S. unit and Molson Coors Brewing Co. No other company would have more than a 5 percent share, regulators said in filings.

The Justice Department filed a civil antitrust lawsuit Friday in U.S. District Court in Washington, but regulators also filed a proposed settlement -- requiring the sale of Labatt USA. They said the lawsuit would be resolved if their conditions were met.

The combination of Anheuser-Busch and InBev brings about the end of more than 150 years of family rule of the St. Louis-based Anheuser-Busch. But 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 the decision to sell the nation's largest brewer was a difficult one.

Anheuser-Busch shares rose 57 cents to close at $68.50 on Friday. InBev said last week it would not reduce or change its $70-a-share offer, even though Anheuser-Busch's share price has dropped amid larger market turmoil.