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MBA stock index ends 4th qtr. with 2.23-percent drop.

MBA Stock Index ends 4th qtr. with 2.23-percent drop

While investors embraced stocks nationally at year and decade-end, they shunned brewery stocks, taking profits in these issues after their run to post-crash highs in the third quarter.

So while the Dow entertained notions of new record highs (which it met on January 2, 1990, when it gained 56 points to surpass the 2800 mark for the first time in history), brewery stocks fell victim to sell orders. And nowhere is this selling pressure more evident than in the Modern Brewery Age Stock Index, which descended 51.71 points, or an average of 2.23 percent, to conclude the three-month period at 2269.40.

In sharp contrast, the Dow Jones Industrial Average and the Standard & Poor's 500 scaled 2.24 percent and 1.22 percent higher, respectively during the same period.

Why the drop in the Modern Brewery Age Stock Index? A 15.05-percent drop in the price of Coors offers one explanation. In mid-December, Coors and Stroh failed to reach a definitive merger agreement before the Friday, December 15th deadline the companies set when they signed a letter of intent on the $425-million transaction September 25. While the companies plan to continue negotiations under different terms, Stroh is now able to hold talks with other potential buyers. For the quarter, Coors was the largest percentage-gainer of the lot, and the main reason behind the 2.23 percent drop in the MBA Stock Index.

The buyout, if realized, would have delivered Coors to a thirdplace spot in the industry. Currently, Coors holds a nine percent market-share which puts them in "a kind of never-never land," according to Peter Coors, president, Coors Brewing Co.

Even market bellwether Anheuser-Busch encountered turbulent trading conditions last quarter as it descended $4.88 a share, or 11.24 percent, to $38.50. The reason: its third-quarter earnings were lower than expected, and more importantly, the company lowered its projections for earnings growth through the end of 1990 because of planned price cuts. The result: Anheuser-Busch was the largest dollar-loser of the lot for the fourth quarter of 1989.

Separately, the St. Louis brewer said it completed the $1.1-billion purchase of Harcourt Brace Jovanovich's theme parks, which include the ever-popular Sea World.

In other news, John Labatt Ltd. bubbled 7.25 percent a share higher to $25.88 after announcing plans for a private placement of C$150 million in preferred shares. Proceeds are to be used to reduce short-term debt at the beer and food concern. Separately, all Canadian brewers were given a lift following a forecast that calls for a one-percent increase in domestic beer sales in 1990, according to analyst Collin Brown. Further, a change in Ontario's pricing practices should reduce the market share of imported brands by a possible 2.6 percent.

PHOTO : BEERS O' THE WORLD - Associated Importers recently announced that Rand Public Relations will continue to handle the company's marketing and public relations responsibilities. Associated's St. Pauli Girl, Suntory, John Bull and Double Diamond beers will be supported by Rand.
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Title Annotation:Modern Brewery Age index
Publication:Modern Brewery Age
Date:Jan 15, 1990
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