Constellation sinks as US sues to block beer deal

The Anheuser-Busch InBev acquisition of Modelo would unite ownership of popular beers such as Bud Light and Corona. If it went through, Constellation was to buy the remaining half of a joint venture with Grupo Modelo, Crown Imports LLC, that imports Modelo beers into the U.S. The Justice Department's objection could sideline Constellation's $1.85 billion deal, which would have landed it greater U.S. control of Corona and other beers.

The deal with Constellation was intended to alleviate antitrust concerns. But the Justice Department says that it wasn't enough to protect U.S. beer buyers, since Anheuser-Busch InBev could terminate its deal to supply Modelo brands to Constellation after 10 years and would retain Modelo brands and its brewing facilities.

Constellation Brands Inc. shares dropped 20 percent to $31.22 in midday trading. U.S.-traded shares of Anheuser-Busch InBev SA fell 7.5 percent to $87.12.

Constellation had predicted that the Crown deal would add significantly to its earnings per share.

In a statement Thursday, Constellation said that the proposed deal would have established Crown as a more "independent and competitive" entity. The company, based in Victor, N.Y., said it no longer expected the Crown deal to close during the first quarter but looked forward to an "expeditious resolution."