Moody's lowers Constellation view to negative

Moody's Investors Service said it affirmed Constellation Brands Inc.'s Ba1 rating, but revised its outlook to negative after news of a revised agreement concerning the Modelo business in the United States.

The speculative-grade liquidity rating also was lowered to SGL-3 from SGL-2.

The new agreement establishes Constellation Brands as the full owner not only of the Crown distribution business, which was contemplated in the $1.85 billion deal reached last summer, but of the entire U.S. business of Modelo in the United States by expanding the deal to include the purchase of the Mexican brewery that produces the beer for the U.S. market and a perpetual license for the U.S. brands, Moody's said.

The outlook revision reflects the meaningful increase in leverage at Constellation that will result from the revised purchase price of about $4.75 billion, as well as greater integration risk as Constellation takes on the role of brewer as well as distributor, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.