News alert: Bass ready to sell brewing and Britvic business
While announcing half year results that saw Bass PLC turnover up 11.2% to £2.5bn on an operating profit of £406m, Bass chairman Ian Prosser said: "We announced in February that we were involved in a strategic review of the brewing business. This has been a long and detailed process which is not yet complete. But the more likely outcome is a sale and we are in confidential negotiations with other companies."
He went on: "When we looked at what was happening we saw consolidation occurring at an increasing rate. When you are involved in a business with these trends you have to take a hard look at the options and their various values for shareholders."
Due to the confidentiality agreements with the companies involved in the bidding process, executives were tight-lipped about details. A timescale as to when negotiations will be concluded is unknown, although industry watchers believe it will be soon.
However, Ian Napier CEO of Bass Brewers gave a stronger hint that a sale of the brewing arm was imminent. He said: "We can't do hotels and brewing, which is the strategic dilemma."
Even without comparing the figures of the two arms, hotels grew 21% in profits while the brewery grew only 3%, the logic of a brewing sale is strong.
Napier said: "We are trying to run in a UK market with four players. And in this shrinking market we can't generate capital to grow internationally."
Ominously he made a comparison to the UK automotive industry when speaking of the future of the UK beer industry saying: "There will be no UK beer brands driven by UK companies."
While the focus of the press was on the sale of the brewing arm, Bass itself was keen to stress the success of its hotel and leisure retail businesses.
But an even tighter focus on hotels alone, without the pub chains, was, Prosser said, not presently on the agenda. "At present we have no plans to sell off the retail arm. We are driving very hard for shareholder value and my present view is that these two sit very comfortably together."
However the future of Britvic, Bass' part owned soft drinks arm, was more doubtful. "If we sell the brewing arm," Prosser said, "we will have to look at the position of Britvic. But there are other shareholders in Britvic. Pepsico is also a shareholder, we will have to discuss it with them."
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