American business to face stiff competition for £1bn lager brand
Constellation Brands, the £2bn American drinks business, has emerged as the highest bidder for Carling in the auction for Britain's best-selling lager.
The group is best known in Britain as the parent company of Matthew Clark, the drinks distributor.
Constellation is believed to have made a £1.35bn offer, topping bids from a clutch of other brewing businesses, including Coors, Heineken and Molson. It now faces stiff competition from a group of private equity firms in the final round of bidding. It is believed that CVC Capital Partners and Cinven, the private-equity groups, have teamed up with former Bass Brewers chief executive Iain Napier to launch a £1bn-plus bid.
At least six trade and private-equity bidders have been selected for the next round of the auction. Dutch brewer Grolsch may join later with a private-equity bidder.
There are also rumours that CSFB Private Equity and Apax Partners may be interested in the business.
The sale includes the Caffrey's and Worthington brands and represents a market share of 18 per cent.
The auction is being conducted by Goldman Sachs on behalf of Interbrew. The Belgian brewing group was ordered to sell the business to comply with competition rules following its £2.3bn acquisition last year of Bass Brewers.
The company has been allowed to keep the Tennent's and Bass brands as well as the breweries in Scotland and Northern Ireland.
It is hoped the deal will be completed by the turn of the year but Interbrew has been given until March to complete.
The emergence of Constellation is a surprise - most industry executives had thought the business would be acquired by one of the well-known European or US brewers.
Constellation is little known in Britain, although as Canandaigua Brands it acquired Matthew Clark before changing its name last year.
Matthew Clark owns the Diamond White cider and Babycham brands and has a national distribution network.
Under Constellation's plans the group would integrate Carling's distribution with Matthew Clark's, which would generate substantial cost savings.
Matthew Clark already supplies most of the pub trade and the integration would save millions of pounds.
It is believed that most of the bidders from the brewing industry, including Heineken and Coors had bid too low in the early rounds to be in contention.
Carling has almost a fifth of Britain's lager market and was built into a market leader by Bass before being sold to Interbrew.
It has no international presence, but its position in Britain is seen as relatively secure despite the presence of Interbrew and Scottish & Newcastle as its main rivals.
Related stories:
Carling buyers set for auction (30 October 2001)
World's brewing giants to fight it out for Carling (20 September 2001)
Decision made on Interbrew's takeover of Bass Brewers (18 September 2001)
Decision on Interbrew's ownership of Bass Brewers delayed (17 September 2001)
Heineken "to make play for Carling" (10 September 2001)
Government to decide on OFT report on Interbrew (10 August 2001)
Government to decide future of Bass Brewers (5 July 2001)
Carling set to be casualty from Bass sale (11 December 2000)