Redhook Ale Brewery is expected to be "the surviving company" should it merge with Widmer Brothers Brewing Co., according to Anheuser-Busch, which holds significant stakes in both US craft brewers.

A-B, which owns a 34% stake in Redhook and 39.5% in Widmer, said it could take part in the talks, which were announced late on Wednesday (3 January).

In a filing to the US Securities and Exchange Commission on Wednesday, the Budweiser brewing giant said it "anticipates that [Redhook] would be the surviving company in any transaction and [Redhook] shares would continue to be quoted on the NASDAQ stock market after consummation of any transaction".

A-B added it expected to "review any proposals made by the parties, may participate in discussions concerning a transaction and will consider the nature and extent of [its] participation in any transaction".

Redhook and Widmer have opened "preliminary discussions" on a possible merger, a move that could "level the playing field" between the two companies and larger US brewers, Widmer co-founder Kurt Widmer said.

"Many of our competitors are huge, multi-national and multi-billion dollar breweries," Widmer told just-drinks yesterday. "They bring tremendous capital to their sales and marketing in the US. Anything that we can do to level the playing field helps."

A union would deepen the relationship between Redhook and Widmer, who together run Craft Brands Alliance, a sales and marketing venture in the western US. Redhook also brews the Widmer brand under licence for the eastern US.

The relationship between the two brewers has faltered somewhat in recent months. In November, Redhook pointed the finger at the Craft Brands venture for its falling sales in western US states and claimed the business had done a better job selling beers from the Widmer stable.

Redhook CEO Paul Shipman denied that the "issues" surrounding the Craft Brands venture had led to the merger talks.

"It was a mutual decision to open talks. There are so many small breweries in the US and access to the market and the management of sales and marketing is a challenge," he told just-drinks.

"We had some specific concerns about the operation of Craft Brands. We raised issues with the allocation of resources behind the Redhook brand in some of the western states. But, I like the direction in which that business is going. It is a positive relationship and one that will certainly go on for a long period of time whether or not the companies choose to combine."

Shipman said the question for Redhook was whether the business would be "substantially stronger" if merged with Widmer. He added: "Our sales and profitability are going in a good direction. I'm quite confident of the success of Redhook as an independent business."

Despite its problems in the west of the US, the company posted an operating profit of almost US$600,000 for the third quarter of 2005, swinging from a net loss of over $109,000 last year.

Neither Shipman nor Widmer could forecast how long talks would last. Widmer said: "There is no telling how long discussions may last. We assume that, because Redhook is a publicly-traded company, there will be some fairly time-consuming regulatory hurdles we may need to address."