Labatt, Belgian Firm Clink Mugs on Takeover Deal
Brewer John Labatt Ltd. accepted an offer valued at $2.9 billion from Interbrew of Belgium on Tuesday, a deal that would create the world’s third-largest brewing company, behind Anheuser-Busch Cos. and Heineken.
Labatt, Canada’s second-largest brewer, turned to privately held Interbrew to rescue it from a hostile $1.68-billion takeover offer from Onex Corp., a Canadian leveraged buyout firm.
The news sparked a sharp jump in the stock of Labatt, which closed up $1.54 at $20 in heavy trading of 12.5 million shares on the Toronto Stock Exchange. The shares have risen more than $5.80 since Onex put Labatt in play May 18.
The takeover, which would be the fourth-largest in Canadian history, would give the brewing group a 44.4% share of the Canadian beer market, a 45% stake in Mexico’s and a 58% share in Belgium’s.
“We are pleased to be joining a company that is highly respected in the brewing community and whose approach to business is compatible with ours,” Labatt Chief Executive George Taylor said in a statement.
Analysts said Interbrew’s $20.70-a-share offer for all Labatt shares is fair and will probably succeed.
Labatt has agreed not to solicit other bids. Onex said it will not sweeten its hostile $17.50-a-share bid launched May 18 with Luxembourg-based holding company Quilmes Industrial.
Labatt holds a 22% stake in Femsa Cerveza, Mexico’s second-largest brewer, and together they own the second-largest specialty beer company in the United States. Labatt also brews Rolling Rock in the United States and the Labatt Ice and Labatt Blue beers in Canada.
Interbrew opens new markets for the Canadian brewer in France, Eastern Europe and China. Labatt already owns Birra Moretti, Italy’s third-largest brewer with brands such as Prinz, La Rossa and Sans Souci. It also operates 533 pubs in Britain.
Interbrew said it plans to sell Labatt’s non-brewing assets if the takeover succeeds, and analysts said a long line of suitors will form for Labatt’s communications group, which includes the TSN television sports network, a concert promoter, several cable channels and a television production unit.
Labatt also owns the World Series champion Toronto Blue Jays baseball club, the Toronto Argonauts football team and 41.6% of Toronto’s SkyDome stadium.
