Allied Domecq, the drinks, foods and retailing group, is expected to make a statement today confirming for the first time that negotiations are taking place, though sources suggest the small print has yet to be finalised.
Hundreds of job losses are expected from the combined workforce of 8,000 employees, based at 14 breweries, with roughly 4,000 each currently working for Bass's brewing business and Carlsberg-Tetley.
One of the Carlsberg-Tetley breweries, in Warrington, had already been earmarked for closure though more are now expected to be shut by Bass in the rationalisation.
The deal will return Bass to the top of the UK brewing industry, a position it lost last year when Scottish and Newcastle bought Courage.
In the process it will raise Bass's share of the market from 23 to around 40 per cent, combining well-known brands such as Carlsberg Lager, Tetley Bitter and Castlemaine XXXX from Allied, with Carling Black Label, Tennent's and Grolsch from Bass.
It will also involve the Danish brewer, Carlsberg, swapping its half- share in Carlsberg-Tetley for a 20 per cent stake in Bass's brewing operations. Allied Domecq will write off pounds 300m from its balance sheet to cover the cost of leaving the brewing business altogether.
Allied will be left with its high-profile spirits brands, including Beefeater Gin and Courvoisier Cognac, retail outlets such as Victoria Wine and Dunkin' Donuts and 4,000 pubs.
The exit from brewing would enable the company to source its beer from a bigger variety of brewers, at more competitive prices, when existing agreements to buy from Carlsberg-Tetley expire next year. The pounds 200m price of the 50 per cent stake for Allied was determined by the length of this supply agreement.
The decision by Allied Domecq to get out of the brewing business is widely seen as the work of the new Chairman, Sir Christopher Hogg, who took up the non-executive post in April. He is also chairman of Courtaulds, the chemicals firm, and the information group Reuters Holdings.Reuse content