Constellation Brands To Buy Anheuser-Busch Mexican Glass Plant

Constellation Brands Inc. has agreed to buy a glass plant in Nava, Mexico from Anheuser-Busch Inbev for about $300 million. The maker and distributor of such brands as Robert Mondavi wines, Corona beer and Black Velvet whiskey will run the plant as a 50-50 joint venture with Owen-Illinois , which will act as its secondary glass supplier, it said in a statement. The company will invest $175 to %225 million to improve transportation infrastructure at the plant, which will eventually supply more than 50% of the glass needs for its U.S. beer business. The company will spend another $450 million to $550 million to expand capacity at the plan to $25 million hectoliters from a current 20 million. Constellation Brands is expecting beer volumes to grow in the mid-single digits from 2016 to 2018, and is targeting operating margins in the mid 30% range. Shares were indicating higher in premarket trade, and are up 21% in the year so far, while the S&P 500 is up 5.3%.