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Interbrew Plans to Buy Stake in Brazil's AmBev

The $11.5-billion deal gives the Belgian brewer quick access to the South American market.

March 04, 2004|From Reuters

Belgium's Interbrew said Wednesday that it would buy a majority stake in Brazil's AmBev in an $11.5-billion deal to create the world's biggest brewer by volume, surpassing U.S. rival Anheuser-Busch Cos.

Interbrew Chief Executive John Brock, who took the helm of Interbrew one year ago, said the brewer of Stella Artois and Rolling Rock would end up with a 57% stake in AmBev, the maker of Brahma beer.

The new group, which would produce 15% of the world's beer, would be called InterbrewAmBev, or InterBev for short.

AmBev Chief Executive Carlos Brito said Interbrew's founding families and AmBev's controlling shareholders would call the shots in operating the new company under a 20-year co-management deal.

Under discussion since October, the deal would give Interbrew access to the quick-growing South American market, where AmBev is the dominant player.

AmBev would launch its brands globally through Interbrew's presence in Europe, Asia, Africa and North America.

"The alliance ... will have operations in 32 countries, 70,000 employees and about $11 billion in annual sales," said Victorio de Marchi, AmBev's co-president of the board.

The deal includes the issue of about $4 billion of Interbrew shares to the controlling shareholders, a cash tender offer to AmBev minority common shareholders for $1.5 billion and AmBev's taking over Interbrew's North American assets valued at $5.6 billion.

AmBev said it expected the deal to be completed in six to eight months.

Interbrew shares closed down 75 cents at $28.75 in over-the-counter trading in the United States. The shares were down for the week on concerns that Interbrew might be paying too much for Brazil's largest brewer.

AmBev's shares jumped $3.75 to $31.50 on the New York Stock Exchange.

AmBev will continue with separate stock listings in Brazil and the United States and take over Interbrew's North American assets -- Canada's Labatt, control of the Labatt USA unit and Interbrew's 30% stake in Mexican brewer Femsa.

Interbrew will issue shares to gain a 21.8% stake in AmBev from the controlling shareholders and then launch a tender offer to minority shareholders, paying 80% of the price in the share issue, to reach 57.5%.

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