Interbrew ends Bass debacle with £1.2bn sale of Carling

The best-selling lager in the UK, Carling, has been sold by Belgium's Interbrew to Adolph Coors for £1.2bn, in a move that catapults the US brewer into second place in the British beer market.

The best-selling lager in the UK, Carling, has been sold by Belgium's Interbrew to Adolph Coors for £1.2bn, in a move that catapults the US brewer into second place in the British beer market.

Coors, the third-largest US brewer, was the surprise victor of a hotly contested auction process, which included bids from the Dutch Heineken and private equity buyers.

The sale of Carling Brewers, which was rushed through in the early hours of Monday, wraps up the tortuous saga of Interbrew's £2.3bn takeover of Bass Brewers in August 2000. It comes almost exactly a year after the Department of Trade and Industry blocked the deal on competition grounds.

It gives Coors, a relative unknown in international brewing circles, a market share of 18 per cent, behind Scottish & Newcastle with about 26 per cent. The group will acquire the majority of Bass Brewers' assets, including Carling lager, four breweries in England, and the Worthington, Caffrey's and Stones beer brands. The deal includes the Grolsch brand, via a joint venture agreement with Grolsch. Coors is to finance the purchase with about $200m (£140m) in cash and a combination of bank and public debt.

Analysts said the price was at the lower end of expectations, which had ranged up to £1.4bn. The deal leaves Heineken, which had been regarded as the favourite trade buyer, struggling to drive UK sales of its premium lager brand, Heineken Export. Jamie Norman, at ABN Amro, said: "The outcome is disappointing for Heineken because this was an opportunity for it to acquire a major route to market. But Heineken were the last people Interbrew wanted in their back yard. Clearly Coors will pose less of a threat."

The Carling disposal, which the DTI ordered in September as a solution to the creation of a duopoly with S&N, will leave Interbrew with Bass's Scottish Tennent's unit, its Northern Ireland brewery and the Bass ale and Boddingtons brands. It will add these businesses to the Whitbread brewing division that it bought in May 2000 for £400m, making it Britain's third-biggest brewer with a 16 per cent market share.

While the deal is subject to regulatory approval, Interbrew expects this to be a formality because the entry of a big brewer not at present represented in the UK is a dream outcome for the DTI. However, the duopoly with S&N controls the Scottish market, where Interbrew is expected to push sales of Stella Artois, its premium lager.

Industry sources said Interbrew had whittled the Carling shortlist down to Coors, Heineken, the Canadian brewer Molson, the British private-equity firm Apax Partners and a consortium made up of Cinven and CVC Capital Partners.