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Labatt's 16% drop lead to depressed quarter for brewers.

Labatt's 16% drop leads to depressed quarter for brewers

Investors discarded the brewery stocks like day-old beer during the first quarter of 1990.

The bottom line: The Modern Brewery Age Stock Index dropped like a stone, shedding 134.84 points, or 5.94 percent, en route to a close of 2134.56. In comparison, the broader-based, widely-monitored Dow Jones Industrial Average fell a nominal 45.99 points, or 1.67 percent, to 2707.21.

Labatt was the principle reason behind the tumbling MBA Stock Index, as it contracted more than 16 percent to close the three-month period at $21.63. The Canadian brewer, whose shares fell in sympathy with the January Freeze when all North American stocks posted dramatic drops, continued its overtures towards debt-laden Bond Corp. Holdings, and may make a US$1.26 billion to US$1.58 billion takeover offer for the Australian brewing giant. Bond's brewing operations were placed in receivership by an Australian court last December 29th. Labatt was the largest dollar and percentage-losing brewer of the lot last quarter, surrendering $4.25 a share, or 16.43 percent, to $21.63.

Not even Coors Brewing Co. could close in the black last quarter, as it toppled $1.63 a share, or 8.23 percent, to $18.13 despite record sales of 17.7 million barrels of beer in 1989 in a flat market. Like Labatt, Coors explored the acquisition route last quarter when it held talks with G. Heileman Brewing Co. regarding the purchase of some of its assets. But the talks did not escalate into anything serious, as Coors decided not to pursue an acquisition at that time. Instead, debt-leery Coors is seeking to borrow $300 million, possible to build or buy more breweries. Also, the Golden, CO-based brewer will ask shareholder to reorganize the brewery into a holding company to monitor Coors Brewing, Coors Technology Cos. and Coors Ceramics.

Even market bellwether, Anheuser-Busch, Inc. fell nominally lower last quarter, easing 75 cents a share to $37.75. Beer price discounting took its toll on fourth-quarter earnings, holding to a scant gain of two percent to $128 million. Last year, the company said its price-cutting was in direct response to similar actions taken by Coors and Miller Brewing Co.
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Title Annotation:Labatt Brewing Company Ltd. stock plummets
Publication:Modern Brewery Age
Date:Apr 30, 1990
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