AB InBev Gulps Corona Maker For $20.1 Billion (Update 1)

As part of the acquisition, Grupo Modelo will sell a 50% stake in Crown Imports, a distribution joint venture with Constellation Brands (STZ) for $1.85 billion. Constellation Brands will own the joint venture outright after the deal. Those proceeds, and $2.7 billion in net cash that Grupo Modelo generates annually will help AB InBev earn $15.5 billion a year in cash, according to JPMorgan calculations.

In early Friday afternoon trading, AB InBev shares rose nearly 6% to $77.90, adding to share gains since reports of a deal first surfaced earlier in June. Friday's rise also pushed AB InBev to new all time highs. Year-to-date, the company's shares are up over 25%.

Constellation Brands shares surged over 22% to $26.70 on news of the deal, to five-year highs. "The agreement should be a huge relief to the shares which were discounting a termination of the jount venture in 2017," wrote JPMorgan analyst Neal Rudowitz, in a Friday note to clients.

AB InBev effectively gained a non- controlling 50% stake in Modelo when InBev bought Anheuser-Busch in 2008 for $52 billion, in the biggest-ever beer merger. At the time, Modelo tried to prevent Anheuser-Busch from selling its minority stake to InBev as part of the merger and even signaled it would look to buy back Anheuser- Busch's non-controlling stake in the Mexican beer brewer, which the Budweiser bought in the 1990s.

The move comes amid a rapid consolidation in the industry as beer giants cut deals to tap faster growing markets outside of Western Europe and the United States.

To combat declining sales in key U.S. and Canadian beer markets and falling profits, Moslon Coors (TAP) recently acquired Czech Republic-based StarBev, the brewer of Staropramen beer, in a $3.5 billion deal that will push the company into heavy-drinking eastern European emerging economies.

In late 2011, SABMiller (SAB) , the world's second-biggest brewer by volume, bought Australia's Fosters Group for about $10.5 billion.

Friday's acquisition puts an end to previous speculation that AB InBev would look to merge with SABMiller, in a deal that was reported to be in excess of $80 billion.

In addition to Latin American beers and Anheuser-Busch's Budweiser family of beers, the brewing conglomerate also owns European brands Stella, Beck's, Bass, Löwenbräu and Leffe, to go with U.S. craft beers Goose Island and Shock Top.