Interbrew and Carlsberg-Tetley, two of Europe's largest brewers, are considering combining their UK beer operations to cut costs and combat the threat of Coors' arrival in the market, following its Carling purchase, a UK paper reported yesterday.

The Sunday Telegraph said that talks between the two companies were centred on combining logistical and distribution divisions into one operation, which would then be contracted out and run by a third party.

The move makes strategic sense in that it would allow Stella Artois and Carlsberg to be supplied alongside each other, offering a premium and standard lager in the same portfolio.

The report said that while the move stopped short of a full merger, it could be a precursor to a more permanent relationship in the future.

Interbrew and Carlsberg-Tetley both control about 14% of the UK beer market, compared to the 28% held by UK leader Scottish & Newcastle.