Courage asking price may be raised

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The Independent Online
Industry estimates pointing towards a £500m takeover price for Courage may have to be raised, with the second largest brewer in the UK set to announce today that it is continuing to recover and is now making profits of more than £2m a week.

Confirmation of the recovery is likely to be contained in today's results for the six months to the end of December from Courage's parent company, Foster's Brewing of Australia.

However, sources in Australia said yesterday that the recent speculation that Foster's would announce the sale of Courage, the second biggest brewer in the UK, was likely to prove wide of the mark.

Talks with prospective buyers in the UK over the last 18 months are understood to have slowed to walking pace, and negotiations were further hampered by last week's move by the Office of Fair Trading to investigate wholesale beer prices.

Courage is right at the centre of the investigation because of its joint ownership with Grand Metropolitan, the international food and drinks group, of Inntrepreneur, the company with a 4,330 strong chain of pubs.

The OFT's probe will probably last at least three months, and perhaps much longer if the Monopolies and Mergers Commission is subsequently asked to undertake a deeper look at the industry's dual pricing policy on selling beer to tied houses and to the free trade.

Industry analysts are already fearful of the fall-out that would arise from any possible clamp-down on the way the brewers set wholesale beer prices. At stake are lucrative supply agreements with dozens of independent pub companies and national accounts, particularly in the leisure industry with companies such as Forte and First Leisure.

Besides the Inntrepreneur problem, Courage has the largest national account book, with a 40 per cent market share. This business is helping to underpin the group, which is fighting hard against the steady decline in beer consumption and fierce price competition elsewhere in the free trade.

While the future of Courage appears to remain undecided, there is increasing speculation that Century Inns, the pub company that last week postponed its stock market flotation, may be taken over.

Institutional backers of the company, which has more than 300 pubs, may look to realise their investment by selling out.

Vaux, based in the North-east, and Wolverhampton & Dudley Breweries, the largest regional brewer and pub owner, are widely tipped as the front two contenders to take over Century.