Interbrew must sell Bass breweries

Trade & Industry Secretary Stephen Byers has agreed with the Director General of Fair Trading's view that the takeover by Interbrew would reduce competition in the UK beer market and drive up prices for consumers.

European brewing group Interbrew has been blocked in its £2.3bn takeover of the brewing interests of Bass, the UK hotels and leisure company. The company has been told by the UK government that it must sell the pubs to an approved bidder.

Shares in Interbrew, which bought the breweries subject to regulatory approval in August last year, fell 20 per cent upon the news.

The government decided that the deal was not in the public interest and Interbrew must now sell the brewing interests to a buyer approved by the director general of fair trading. Interbrew also bought UK leisure group Whitbread’s beer business in June last year.

UK trade and industry secretary Stephen Byers said: “the merger would reduce competition in the market, lead to higher prices for end consumers and reduce consumer choice.”

US private equity firm Hicks Muse Tate & Furst and Danish brewer Carlsberg, who both lost out to Interbrew last year are rumoured to be interested in the acquisition. Dutch brewer Heineken is also said to be in the running. Hicks Muse has not commented on its intentions as yet and Carlsberg is said to be interested if it could gain UK regulatory approval.

Last month Hicks Muse Tate & Furst and other minority shareholders sold champagne houses Mumm and Perrier Jouet to Allied Domecq, the spirits and wine group, for E575m.