Labatt ponders Bond's assets - John Labatt Ltd. considers bid for Bond Corporation Holdings Ltd

Modern Brewery Age, Jan 22, 1990

Labatt ponders Bond's assets

John Labatt Ltd. last week announced that it is considering a bid for the ailing Bond Corp. Holdings Ltd.'s Australian brewing concerns.

According to Labatt vice president of corporate affairs Edward Stewart, the Canadian brewer could make an offer between $1.26 billion and $1.58 billion.

"Obviously, if [Labatt] decided to make an offer, we'd need to conduct more rigorous reviews," Stewart said, adding that any arrangements could take many months to reach a final agreement.

Additionally, Stewart noted that the bid would be made on Bond's Australian brewing facilities only since Labatt's Latrobe Brewing Co. already gives the company an influence in the American market. The Bond-owned and U.S.-based G. Heileman Brewing Co. does not "fit in with our plans," Stewart reported.

One factor that Labatt must contend with in the event a bid is made is that such a purchase would bring the company into competition with Australia's largest brewer, Elders IXL Ltd. Currently, the two brewers compete in Canada since a $1.34 billion joint venture merged the Elders and Molson Cos. Canadian brewing operations.

The circumstances that could result from Labatt's purchase "would create an interesting situation where [Molson] and Labatt would be competing head-to-head," both in Canada and Australia, according Marshall Cohen, president and chief executive officer, Molson.

Some stock analysts believe that although Labatt could afford to purchase the Bond breweries, such a move might not be in the company's best interests.

Instead of looking Down Under, analysts cite Europe as a stronger market to quench Labatt's expansion interests.

"[Australia] is a flat, mature market, with just one very strong competitor," said Ian Osler, analyst, Prudential-Bache Securities Canada Ltd. "I think they'd do better looking for more assets in Europe."