Powell's ludicrous merger deserved to be leaked

Granada upside; Byers' minutes'

Ever since buying Bass Brewers nearly two years ago, Interbrew, the Belgium brewer, has staggered as if drunk on its own booze from one cock-up to the next. But even by its own bumbling standards, the latest débâcle takes some beating. Hugo Powell, Interbrew's beleaguered chief executive, awoke yesterday morning to find that confidential documents exploring the possibility of a takeover bid for South African Breweries (SAB) had been scattered like confetti across the British press. At least four national newspapers had been included in the drop, together with Reuters and the BBC.

You really couldn't have made it up. SAB was referred to under the codename Zulu while Interbrew was called, Ice, a trendy new type of beer favoured by the young. For "potential Thistle interloper risk" read the possibility that Scottish & Newcastle would spoil the party by launching a counter bid for SAB. Whoever it was who had decided to blow the gaff on Interbrew's plans even helpfully provided his own "executive summary" – inaccurate as it turns out.

All the same it made a good read. After a board meeting on 3 December, it said, Interbrew would launch a £4.6bn share swap bid for SAB to create the second-largest brewer in the world and the largest outside the US. The actual documents propose a rather less dramatic nil-premium merger, which obviously would have required the agreement of the SAB board. For what it's worth, SAB yesterday made it pretty plain that no such agreement would be forthcoming.

Interbrew's immediate response was to try to make light of the whole affair. This was more about fee-hungry investment bankers at Goldman Sachs and Lazards, with too much spare time on their hands, exploring different strategic options for Interbrew than anything else, we were invited to believe. At the same time, however, it was careful not to rule out making an offer for SAB at some stage in the future, while at the same time confirming that thus far there have been no talks at all. It is hard to recall a planned merger approach being so comprehensively leaked.

To add to Interbrew's embarrassment, the plans are in any case a complete joke. SAB is a smaller company by market capitalisation, but in terms of strategy and management it is streets ahead of Interbrew. Interbrew is a quite poorly run family controlled brewer with all its assets in mature or declining western European markets. Since the IPO a year ago, its share price has plummeted and it so spectacularly misjudged its assault on the UK market that it is now being forced to sell a large part of its Bass Brewers acquisition for a knock-down price.

SAB has hardly been a stock market darling either since it switched its primary listing from South Africa to London, but that's largely because of the weakness of the South Africa rand, and the City is otherwise all in favour of the strategy developed by Graham Mackay, SAB's chief executive, of concentrating on fast growing developing markets. We should hear more about this today with news of another big acquisition – possibly Kaiser in Brazil.

There are plenty of combinations among international brewers that might make sense. The industry is certainly ripe for consolidation and there's a lot of talking going on. But Interbrew and SAB is not one of them. As if to confirm the point, the leaked documents refer to "limited synergy benefits (more work needed)". It all looks like another fine mess that Interbrew has got itself into.

Granada upside

It was a long time ago that ITV was described as "a licence to print money" and much has changed since, but by any standards, full-year figures yesterday from Granada were shockingly awful. The bottom line loss is £186m after taking account of the black hole of ITV Digital. Results for the same period from Carlton next week are likely to look worse still, since Carlton doesn't even have the cushion of a sizeable production house to protect it from the collapsing advertising market. Nor does it have Granada's strong balance sheet to fall back on. On all fronts, ITV seems to be in a state of crisis.

On the other hand, these are figures that speak to the past, not the future. It is always darkest just before the dawn, goes the old saying, and it may be that yesterday's results mark the nadir of Granada's fortunes. Advertising is still running at levels very substantially below a year ago, but it is not nearly as badly down as it was in the summer. Meanwhile production revenues are continuing to grow.

Even the seemingly intractable problem of ITV Digital shows some signs of a resolution. Granada has brought in David Chance, a former chief executive of BSkyB, to knock heads together, and while there's many a slip between cup and lip, he seems to be making genuine progress in achieving an industry-wide solution that would include both Sky and the BBC.

Neither of these companies would come in as equity partners but they might be persuaded to help defray ITV Digital's costs under reciprocal arrangements that would see the Beeb support the free-to-air digital proposition and make Sky responsible for the management and marketing of the pay-TV subscriber base. This is the news the stock market is really waiting for and it may not be long in coming.

Byers' minutes'

"Stephen Byers is like the farmer who shoots the sheepdog and then remembers the sheep are still in the paddock. Now he is trying to give the dog the kiss of life." This comical assessment of the Secretary of State for Transport's handling of the rail crisis comes from the chief executive of one of Britain's biggest companies. The rest of his remarks are unprintable.

Mr Byers is gamely hanging on to his job as the evidence of ineptitude continues to mount against him. The latest blow to his credibility was the publication of the minutes from his fabled meeting with the Railtrack chairman. These fail to support Mr Byers' assertion that John Robinson demanded a blank cheque otherwise the company would cease to be a going concern.

The explanation, says Mr Byers, is simple – Mr Robinson asked for that part of the meeting not to be minuted. Rubbish, replies Mr Robinson, I said no such thing. Whatever the truth, the fact is that Mr Byers, to use one of the minister's own favourite phrases, has become "part of the problem, not the solution".

Even though Mr Byers tried to bury the minutes by publishing them just as Gordon Brown got up to speak on Tuesday, the storm grows worse, not better. Yesterday's lobby briefing at Downing Street spent as much time dissecting Byersgate as the Chancellor's pre-Budget statement.

Just as Mr Byers has inexplicably stood by his discredited special adviser, Jo "bury the bad news" Moore, so the Prime Minister stands by his discredited Secretary of State. Ditching Mr Byers would make it look as though Mr Blair no longer believed in his policy on Railtrack, which would present the PM with quite a problem given that he approved it. But the longer Mr Byers stays in office, the more the Government itself is damaged. At one stage, a discreet mid-term reshuffle looked like the answer. No longer.

j.warner@independent.co.uk