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ARGENTINA: Ambev given go-ahead for Quilmes deal

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The Brazilian beermaker AmBev has obtained a green light from the Argentine authorities to acquire a significant stake in Quinsa, which controls Argentina's leading beermaker Quilmes.

The US$6m deal will see AmBev, the world's fourth largest brewer, take a 37.5% holding in Quinsa, which in turn controls Quilmes, a market leader in Argentina, Bolivia, Paraguay and Uruguay.

However the Argentines have imposed certain conditions on the sale, due to fears the deal will create a monopoly. "Final authorization of the operation by the Argentine state is conditioned on a series of actions that both companies must fulfil in the next 12 months," the production ministry said in a statement.

These actions will include selling assets in Argentina, including some local brands and beer production factories. However, the spin off sale will have to be to a third party that is not currently involved in the production of beer.

The brands the authorities earmarked for sale are Bieckert, Palermo, Heineken and/or Imperial as well as the Norte brand should the eventual buyer want it.

"Via these conditions, we are seeking to generate a new international competitor that can fulfill the role of Brahma - before it was merged with Quilmes - to regulate prices in the local market," the statement added.

The two companies are expected to issue a joint statement sometime today on their reaction and have declined to comment until then.

However analysts believe the terms are stricter than expected and may impact the terms of the deal.

"At the moment (Ambev) is not going to be able to get what they wanted, there could be a revision to the price," said Alexandre Garcia, an analyst at Espirito Santo Securities in Rio de Janeiro.

The sale of the stake has been contentious since the start and been the subject of numerous legal reviews. In November Quilmes put the deal on ice while an international arbitration panel reviewed the deal after Heineken objected because it said it had been in talks to increase its own stake in Quinsa, but was suddenly confronted by the AmBev-Quinsa deal.


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