Interbrew to take a 760 million hit over Bass sell-off

INTERBREW is to take a oneoff charge of e1.2 billion (760 million) to cover the cost of reselling Bass Brewing.

The move confirms market rumours that the Belgian firm has no chance of recouping the 2.2 billion it paid for the business last year.

Interbrew will also seek a judicial review of Trade Secretary Stephen Byers' decision to make it sell Bass on the grounds that a disposal is a "disproportionate" remedy.

The chances of the ruling being overturned are not high.

Chief executive Hugo Powell's "quiet confidence" in a positive competition ruling last year has come back to haunt him. He was notably free of gung-ho predictions today. Instead he focused on the "unfair" conditions laid down by Byers regarding the sale.

"We are asking for more time on the manner of the sale and more flexibility on the list of buyers," he said.

Interbrew must sell Bass to a buyer that meets the approval of the British Government, but finding a big enough shortlist is proving a problem.

The 760 million non-cash charge, which works out at a loss of e2.80 per share, was immediately denounced by analysts as a disastrous sales tactic.

Reginald Melchers of Belgian bank F van Lanschot called today's announcement "an enormous, expensive joke".

He said: "Taking this charge gives air to the rumour doing the rounds that they will only get 1.5 billion. They are allowing a buyer to get away with a relatively low price for 22% of the British beer market."

Together with its Whitbread brewery, Interbrew had a third of the UK beer market, including Stella, Carling and Tennents.

Heineken, Anheuser Busch and South African Breweries, all of which Interbrew outbid last year, are the main contenders.

Powell today denied the oneoff charges were an admission that Interbrew would get only 1.5 billion for the business. He said the assets for sale were not the same as those he bought.

Interbrew will keep Bass's non-UK brewing assets, including its Czech beer operations, and non-alcoholic beverages. Their value has not been disclosed.

Powell said the 760 million loss was intended "to provide a reserve that is prudent and that will be more than the eventual outcome. When we have made the sale, we may be able to return some of the money."

The shares in Interbrew, which have fallen from a high of e37, were up e1 at e27.5 as investors factored in the loss.

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