Interbrew purchases Whitbread beer unit

Modern Brewery Age, June 5, 2000

Belgian brewing giant Interbrew announced that it has bought the beer business of Britain's Whitbread PLC for $590.6 million in cash, opening the possibility of further acquisitions after its upcoming IPO. The price was at the higher end of analyst's predictions.

In a statement, Interbrew chief executive Hugo Powell said that Interbrew was the logical buyer of Whitbread. "Whitbread brews Stella Artois, the number one premium lager in the U.K., under license and the business also perfectly complements our strategy of being a world brewer with strong local presence in key markets."

The deal makes Interbrew number three in the European brewery rankings, behind Heineken and Scottish & Newcastle/Danone in volume terms. In the world rankings, Interbrew is now number four, behind Anheuser-Busch, Heineken and Miller.

Whitbread currently holds 16% of the British beer market. The company employs 3,900 people at three breweries in South Wales, Manchester and Lancashire. About one-third of the company's volume was provided by the Stella Artois brand, which it has brewed under license since 1976.

Whitbread began brewing in London in 1742, and moved to a site on Chiswell Street in the city financial district in 1750. The company brewed at that same London location until 1976, when it closed the London brewery and turned the site into the company's corporate headquarters.

The company was the number three British brewer in 1990, and remained number three to the end of the '90s, but the climate of the British brewing industry was undergoing dramatic changes, and analysts say that Whitbread missed crucial opportunities to merge with other British brewing groups.

Whitbread attempted to merge with Allied-Lyons in 1992, a deal that would have created the largest brewery in Britain, but the big government-ordered pub sell-off was taking place at the time, and the merger was deemed too risky. Another abortive merger with Scottish & Newcastle in the early 1990s died stillborn.

Industry analysts said that the tremendous success of the license-brewed Stella Artois brand in Great Britain pushed Whitbread and Interbrew together, and laid the groundwork for the current merger.

                         Euro Breweries, by volume
               (volume measured in millions of hectoliters)
 1. Heineken N.V.           48.0
 2. Scottish & Newcastle    33.1
 3. Carlsberg               26.0
 4. Interbrew               22.3
 5. Bass                    18.9
 6. South African Breweries 16.8
 7. Guinness                15.2
 8. Binding Group           10.7
 9. BBAG                     9.2
10. Whitbread                8.7
Source: Canadean Ltd. Editor's Note: One hectoilter is
26.42 U.S. gallons, or 0.8522 U.S. barrels.