Bond Corp. Holdings Ltd., the Australian conglomerate, continued its push into the American beer market Wednesday by agreeing to pay an estimated $1.2 billion for G. Heileman Brewing Co., the nation's fourth-largest brewer.
The deal, which gives Bond such regional brands as Henry Weinhard's, Colt 45, Lone Star and Rainier, was reached after Heileman rejected a hostile $1.01-billion offer earlier this month and after the Wisconsin Legislature passed special anti-takeover laws.
The acquisition of the LaCrosse, Wis.-based brewer is Bond's second move into the U.S. beer market in the past 18 months and immediately fueled speculation that the Australian company will use its new purchase to launch a new beer for the U.S. market, and, possibly, for international markets as well.
"They have the capacity now to try something innovative," said Emmanuel Goldman of Montgomery Securities, a San Francisco brokerage house. "It is clear that Bond has more on its mind than just Heileman's regional markets."
The deal also comes as an increasing number of Australian companies and such high-profile entrepreneurs as Robert Holmes a Court and Rupert Murdoch have been looking to the United States for places to expand their empires from Down Under.
Beer is not the only U.S. interest for Bond Corp. Last month, the company bought a 90% stake in St. Joe Gold Co. for $500 million from Fluor Corp in Irvine. The conglomerate, which had a profit of $95.6 million on sales of $1.82 billion last year, also has international interests in oil, retailing, air transport and television by virtue of a $1-billion purchase earlier this year of a chain of Australian television stations.
Bond Corp. was founded by Alan Bond, the chunky, 49-year-old sailor tycoon whose yacht, Australia II, won the America's Cup from the United States in 1983 with skipper John Bertrand at the helm. A high school dropout who maintains offices on his Southern Cross yacht on the Mediterranean Sea and in Perth, Bond is said to have a personal fortune of nearly $300 million and an extensive collection of Impressionist paintings.
The price Bond was willing to pay for Heileman shocked Wall Street and beer industry analysts largely because Heileman's share of beer sales in key markets--including its own backyard of Minnesota and Wisconsin--has slipped in recent years.
"I'm amazed at the price," said Jerry Steinman, publisher of Beer Marketing Insights. "The question is what do they know that the rest of us don't?"
The hidden prize in Heileman's, some analysts noted, might be its unused 8.5-million gallon brewing capacity, production space that Bond could use to increase its presence in the U.S. and international beer markets.
With Heileman, Bond Corp. will be able to combine its Australian brewing and export operations of its Swan beer with Heileman's U.S. operations to become the fourth-largest brewer in the world. Bond already dominates about 45% of Australia's beer market and is a major exporter to Great Britain, Japan, Asia and the Middle East.
In a Sept. 3 letter to Heileman Chairman Russell G. Cleary, Bond said he plans to boost Heileman brands into foreign markets once the sale is completed. The merger also allows Bond to put Swan beer into Heileman's distribution channels in the United States.
Still, many analysts expect a new national, and possibly international, brand from Bond. In February, 1986, Bond purchased Pittsburgh Brewing Co., which markets Iron City, and is testing a national brand called American Beer.
According to Thomas Pirko, publisher of Bevmark, a beer industry newsletter in Los Angeles, the Bond-Heileman deal will affect the price of future brewery takeovers. Pirko said he believes that the major beneficiary of Wednesday's deal is Philip Morris, owner of Miller Brewing Co., the nation's No. 2 beer maker whose takeover price and acquisition profile was substantially increased by the Bond-Heileman deal.
Keeping Wisconsin Operations
The merger calls for Bond to pay $40.75 a share for Heileman's 26.6 million shares, compared to the $38-a-share offer that Heileman earlier rejected. The total price of the deal will be about $1.22 billion when convertible preferred shares are taken into account.
The agreement, which has been approved by Heileman's board, also provides that Heileman will maintain operations in Wisconsin and corporate headquarters in La Crosse. It further provides for Heileman to honor all labor agreements with workers as well as with distributors and vendors.
The company's stock, which traded as high as $42.50 a share earlier this month on the expectation of a bidding struggle, fell in heavy trading after the agreement was announced, with many speculators unloading large blocks. On the New York Stock Exchange, Heileman lost 12.5 cents to close at $40.50.
THE U.S. BEER MARKET
Market share of brewers based on 1986 production of 187.6 million 31-gallon barrels.
Anheuser-Busch 38.6% Miller 20.6% Stroh 12.2% Heileman 8.5% Coors 8.1% Imports 4.7% Pabst 3.8% Regional brewers 3.5% Source: Reuters, Beer Marketer's Insights newsletter