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The US Department of Justice said Friday it had approved the $20.1 billion merger between Anheuser-Busch InBev and Grupo Modelo following a settlement that resolves antitrust concerns.
Under the proposed settlement, the companies must divest Modelo's entire US business, including the licenses of Corona beer and other beer products, to Constellation Brands.
The settlement aims to enable Constellation to be an "independent, fully integrated and economically viable competitor to AB InBev," said Assistant Attorney General Bill Baer, head of the department's antitrust division.
Under the proposed settlement, which must be approved by a federal court, Constellation would acquire a Modelo brewery in Mexico, US licenses for Modelo brand beers and Modelo's interest in the Crown joint venture, which imports, markets and sells certain Modelo beers in the United States.
The Justice Department argued the deal as originally configured would have harmed US consumers.
The deal is "the most transformational event in the history" of the 68-year-old company, said Constellation chief executive Rob Sands in a statement.
"This transaction will nearly double the sales of our company, significantly enhance our earnings and free cash flow, diversify our profit stream and provide new avenues for growth.
"It will solidify our place in the US beer market for the long term."
Constellation will spend a total of $4.75 billion on the assets, a company spokeswoman said.
Under the settlement, AB InBev will own Modelo's businesses in Mexico and will be able to market Corona as a global brand outside of the United States alongside Budweiser and other products.
AB InBev will also gain access to the Mexican market.
"This combination is driven by the growth potential of Modelo brands in Mexico as well as worldwide outside the US," an AB InBev spokeswoman said.
It "would create a significant growth opportunity worldwide from combining two leading brand portfolios and distribution networks."
The Justice Department said the agreement will ensure that US beer drinkers benefit from a competitive market.
"This is a win for the $80 billion US beer market and consumers," Baer said. "If this settlement makes just a one percent difference in prices, US consumers will save almost $1 billion a year."
The Justice Department in January moved to block the takeover, saying it needed to protect the $80 billion-a-year US beer market from anticompetitive pricing, given the popularity of Corona and some of Modelo's other brands.
The department argued the US beer market was already highly concentrated and that Modelo acted as a strong counterweight to AB Inbev's pricing. The different parties have been in settlement talks since the suit was filed.
AB InBev, Grupo Modelo and Constellation "intend to move swiftly to complete the pending transactions" once they are approved by the court, said an AB InBev statement Friday.
AB InBev said it expects the transaction to be completed in June.
AB InBev shares were up 1.3 percent after the announcement. Constellation shares were up 1.9 percent.