If Anheuser-Busch Cos. wants to thwart a takeover bid by Belgian brewer InBev, it may have to rely on a Mexican partner. But that partner may not be willing to dance.

There is speculation that Anheuser-Busch will try to buy the other half of Grupo Modelo, Mexico's biggest brewer and the maker of Corona. Purchasing the rest of Grupo Modelo might make Anheuser-Busch too expensive for InBev to buy.

InBev this week slapped a $65-per-share offer on the table for Anheuser-Busch. InBev says the offer's cash value is $47.5 billion. Anheuser-Busch's board of directors is reviewing the offer.

Modelo and Anheuser-Busch quickly started talking privately about a combination of their own, according to the Wall Street Journal. Both companies declined to comment on the reported talks.

But some observers doubt Modelo wants to sell. Modelo "is not interested in selling the rest of itself," New York City-based Citigroup analyst Celso W. Sánchez wrote in a research note Thursday.

Modelo has been a partner of Anheuser-Busch since 1993, when the St. Louis brewer bought an initial stake.

In recent years, Modelo has been one of the biggest contributors to Anheuser-Busch's bottom line, pumping in more than $400 million in cash dividends just last year.

Modelo's chief executive, Carlos Fernández, has been on Anheuser-Busch's board since 1996.

However, the 1993 partnership with Anheuser-Busch has been a "bad deal" from Modelo's perspective and has increasingly encroached on the company's ability to stay independent, Credit Suisse analyst Carlos Laboy wrote in a research note Wednesday.

The relationship between the two companies is "cold-shoulder" and "uncomfortable," wrote Mexico-based analyst Tufic Salem, also of Credit Suisse.

That is ironic, because Grupo Modelo is Anheuser-Busch's only lever for either fending off InBev or raising the bid price to the level of $70 a share, Salem wrote Friday.

Anheuser-Busch "really needs a plan right now, and Modelo may be (its) best option," HSBC analyst Lauren Torres said in an interview Friday.

But unlike Anheuser-Busch, Modelo appears to have a number of alternatives.

It could attempt to buy back its portion of ownership held by Anheuser-Busch. It could turn down Anheuser-Busch's reported overtures, banking instead on a future partnership with InBev, which has openly expressed a desire to help Modelo's brands grow faster outside North America.

It could, of course, sell out to Anheuser-Busch.

But "given the high family ownership at Grupo Modelo, we view an attractive transaction with (Anheuser-Busch) to be unlikely," Standard & Poor's equity analyst Esther Kwon wrote in a research note Friday.

Different families within Modelo's ownership trust may have different views about management, the direction of the company, and short- and long-term investment strategy.

"Everybody has a price," said Eduardo Garcia, editor-in-chief of the financial news website Sentido Común in Mexico City. But "I think they feel proud of being a Mexican company and they're very proud of Corona being the No. 1 imported beer in the U.S."

If Anheuser-Busch launches its own offer for Modelo, will the Mexican company accept?

"This is a complex decision process in a very short time for a company that has proven slow to change," wrote Salem.

For its part, Modelo said Friday that its goal is "to continue to be a Mexican company that brews high quality beer in Mexico for markets all over the world."

There is some debate about whether a takeover of Grupo Modelo would be in Anheuser-Busch's best interests. Modelo has had a challenging year. In Mexico, it has struggled against competition from FEMSA, the brewer of Dos Equis and Tecate, which at the end of 2007 had about 44 percent of the market compared to about 56 percent for Modelo.

Meanwhile, the Corona brand has weakened somewhat in the U.S. Anheuser-Busch predicts that its equity income from Modelo and Chinese brewer Tsingtao will drop this year.

Buying another company to stop a deal is a dangerous strategy unless the deal would stand on its own merits, said David Stone, a mergers and acquisitions expert with the Neal, Gerber & Eisenberg law firm.

Anheuser-Busch has been "patiently waiting" to take over Modelo for 15 years, but it would need approval from its own shareholders to slam a deal together now, wrote Laboy. That go-ahead might be hard to come by.

"It is unlikely that shareholders of A-B would go along," he said, "if it put their $65 out of reach."

jmcwilliams@post-dispatch.com

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