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UK: Whitbread and Bass to Quit Brewing

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British leisure group Whitbread is reported to be about to sell its brewing business to its Belgian rival, Interbrew, for an estimated £400-450m.

Whitbread's brewing assets include Boddingtons, Flowers, Mackeson, Murphy's and Wadworth 6X.

Interbrew has refused to confirm or deny the report.

A spokesman said: "If an agreement has been reached then it will be communicated. That applies also with any so-called pending problems, when they have been solved."

It is understood complex legal problems could delay any announcement of a deal.

Family-owned Interbrew, which plans to float by the end of the year, already licenses Whitbread to brew its flagship Stella Artois lager in Britain.

The report comes as Whitbread is preparing to launch a new lager - "GB" - made exclusively from British ingredients.

Decline

Quoting "insiders", the Sunday Business newspaper said Whitbread and another of Britain's major brewers, Bass, were about to quit brewing.

It said Heineken was favourite to win control of Bass's range, which includes Britain's top-selling lager, Carling, at a price believed to be in excess of £2bn.

According to Bass's website, the British public spends more on Carling than on Coca-Cola, Walkers Crisps, Nescafe, Ariel and Andrex combined.

If the sales go ahead, Scottish & Newcastle - which owns Courage, John Smith's and Theakston's - will be left as the only major UK-owned brewer.

Huge overcapacity has been blamed for brewers leaving the market to concentrate on other areas of business.

Diversification

Whitbread, founded in 1742, has diversified into restaurants, hotels and fitness, including Marriott Hotels, Swallow, David Lloyd Leisure, Beefeater, Pizza Hut and Costa Coffee.

Since 1991, 33 UK breweries have been closed or scaled down, cutting production capacity by more than 3.7 billion pints.

Credit Suisse First Boston has estimated that the UK market still has overcapacity of about 22%.

This has come about because the British are drinking less beer. Since 1984, the markets for wine and cider have been growing at beer's expense.

Interbrew sells about 120 lagers and beers, including top Western European brands Jupiler and Dommelsch, in more than 110 countries.

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