Bass review will not stop Interbrew's £10bn float

* <i>NEWS ANALYSIS </i>Delaying the IPO would be risky, the Belgian brewer feels. And, analysts say, it needs the cash
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The Independent Online

A spectacular laser show at the King Baudouin Stadium in Brussels yesterday accompanied the unveiling of Interbrew's imminent flotation on the Euronext exchange.

A spectacular laser show at the King Baudouin Stadium in Brussels yesterday accompanied the unveiling of Interbrew's imminent flotation on the Euronext exchange.

But the closing words of Patrice Thys, the group's company secretary - "God bless us, and God bless you" - may prove to be a rather better indication of the sentiment surrounding the listing.

Interbrew is proceeding with its plans to float about 20 per cent of its shares, worth up to 3.3bn euros (£1.98bn), on 1 December, despite being the subject of a UK Competition Commission review into its £2.3bn purchase of Bass's brewing interests.

The Belgian company had earlier paid £400m to buy Whitbread's beer division, and there is concern that the combination of the two British businesses would give Interbrew an unacceptable level of control in the UK.

Asked why he had decided to go ahead with the initial public offering, given the uncertainty surrounding the British acquisitions, Interbrew's chief executive, Hugo Powell, said: "The risk of waiting... is greater than the risk of proceeding."

Nigel Popham of brokers Teather & Greenwood said: "I didn't think they would [go ahead]. But if they can find enough people to put money into it, then good luck to them." Another analyst said: "They have to proceed. They need the money, frankly."

Interbrew will use the money raised from the offering to repay the short-term debt it had taken on to help fund the Bass purchase. Any remaining proceeds will be spent on further international expansion.

The brewer, whose best-known brand is Stella Artois, is now the second-biggest brewing player in the world, trailing only Anheuser-Busch, the US-based Budweiser group. If the Bass and Whitbread businesses are allowed to remain intact in the portfolio, Interbrew will have a comfortable lead in the UK, with an estimated market share of 32 per cent compared to Scottish & Newcastle's 28 per cent.

But industry experts say there is only a slim possibility that Interbrew will emerge from the regulatory examination unscathed. It is widely expected that the company will be forced to give up certain beer supply contracts and distribution operations before the Bass deal can be passed by Stephen Byers, the Secretary of State for Trade and Industry.

There is also speculation that the group could be made to sell off core Bass brands, such as Tennent's, to dilute its market share in Scotland - a suggestion that has caused some analysts to question the logic of the whole acquisition.

Last month the Competition Commission published an "issues and remedies" statement, outlining the potential adverse effects of the Bass purchase and highlighting the possibility of an enforced disposal of the entire Bass unit as one of a number of options it was considering. The watchdog is expected to complete its inquiry by 6 December. The findings will be handed to Mr Byers, who will make his conclusions public in early January.

Mr Powell, who is scheduled to appear before the inquiry panel next week, said yesterday: "We sit here quietly confident... We will be pragmatic when we learn the real definition of the issues that need to be addressed." He added that the hypothetical concerns and remedies outlined by the commission in October contained "everything from soup to nuts", urging people to draw no premature conclusions from some of the more drastic measures outlined for consideration.

Mr Powell argued that the UK market was "the most competitive in Europe", with six "major" local brewers and the "powerful" presence of independent pub companies such as Punch Taverns and Enterprise Inns. In no other European country except Germany, Mr Powell said, is the market share of the leading brewer any lower than the proposed level of control that would be adopted by Interbrew in the UK.

But whether or not Mr Powell's optimism prevails, the flotation of his company next month - the biggest in Belgium's corporate history - will mark a turning point for a business whose roots can be traced as far back as 1366.

As a private company, Interbrew has so far managed to maintain a relatively low profile despite its flagship brands and its aristocratic board of directors, headed by the group's chairman, Baron Paul de Keersmaeker.

The business has grown from its origins as a "brewpub" on the outskirts of Brussels into a global concern under the control of three Belgian families - De Mevius, Van Damme and De Spœlberch. After the flotation, the foundation grouping the shareholdings of the family members will retain 65.93 per cent of the listed company, or 64.56 per cent assuming that the over-allotment allocation, representing 15 per cent of the new shares, is exercised in full.

It was not clear precisely how Baron de Keersmaeker, who addressed yesterday's IPO meeting mostly in Flemish, feels about finally releasing his company into the public domain or how long the 71-year-old will feel comfortable at the helm of a quoted business.

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