Interbrew announces deal to buy Beck's.
Interbrew, whose own flagship brand is Stella Artois, said the deal for the 128-year-old Brauerei Beck GmbH & Co. would make it the No. 2 brewer in the premium lager market, behind the Dutch company Heineken.
That market "has the highest potential in terms of volume and value," Interbrew Chief Financial Officer Luc Missorten said in a conference call with journalists.
But Interbrew shares, which initially rose on the news, were down more than 4 percent in midday trading after the deal was announced.
Analysts described the price as relatively high, but said Interbrew could see benefits if it can increase exports to countries like the United States, where sales of imported beers are growing. Beck's is Germany's No. 1 export beer.
"It's not exactly cheap," said Han Van Lamoen, an analyst at Delta Lloyd bank in Amsterdam. "But if you can use the distribution network to pump up sales 20 percent, then it's OK. If not, then they paid too much."
Beck's, which only last month put itself up for sale, welcomed the quick closure of a deal. Chairman Dieter Ammer in Bremen said Interbrew would help Beck's expand into more countries while also preserving the value of the local market.
The deal is subject to approval by Beck's shareholders and regulatory authorities.
The move into neighboring Germany marks a shift for Interbrew, the world's second-largest brewer by sales volume, with brewing operations in 19 countries.
Interbrew has doubled its size since 1995 mainly by acquiring local brands in other countries and building them into the No. 1 or No. 2 brewer locally.
Recent buys include Canadian brewer John Labatt Ltd. in 1995 and Britain's Bass Brewers, which ran into problems this year with British antitrust regulators.
Yet Interbrew had long maintained it was not interested in the fragmented German market because there are too many brands. Germany, where beer has been made for more than 2,000 years, has more breweries than the rest of Europe combined--1,269 in 1997.
But late last month, saying the German market had "enormous consolidation potential," Interbrew made its first buy with an 80 percent stake in Diebels GmbH & Co., another brewer.
"We're buying premium brands, creating a portfolio to have a more successful appeal," Missorten said.
There were multiple bidders for Beck's, including U.S.-based Anheuser-Busch Cos. and Scottish & Newcastle Breweries PLC of Britain.
The privately held Beck's is Germany's fourth-largest beer brewer, with annual sales estimated at about 850 million euros ($752 million).
It exports almost half the beer it brews annually to more than 120 countries, accounting for 30 percent of all German beer exports.
Interbrew already promotes Stella Artois worldwide, leading some analysts to question how Beck's, also a premium lager, would fit into that strategy.
But Interbrew spokesman Corneel Maes said Beck's will complement Stella Artois.
"In most cases where one is strong the other is weak," Maes said. "There's distinctive brand identity."
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|Title Annotation:||Brauerei Beck GmbH und Co.|
|Publication:||Modern Brewery Age|
|Article Type:||Brief Article|
|Date:||Aug 13, 2001|
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