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Bass signs Interbrew deal
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June 14, 2000: 8:49 a.m. ET
UK hotel and pub company sells beer unit to Stella Artois maker for $3.5B
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LONDON (CNNfn) - Hotels, pubs and beer firm Bass unveiled Wednesday the long-expected sale of its brewing division to Belgium's Interbrew for £2.27 billion ($3.5 billion), freeing the British firm to plow the cash into expanding its hotels and pubs business.
Analysts had speculated the sale would fetch only about £1.8 billion when Bass first started exploring options for the brewing unit in February. Shares of Bass (BASS) rose 4.0 percent to 730 pence in London after the news. 
Confirmation of the deal will almost certainly spark further takeover activity. Bass said it would take time to consider what to do with the proceeds.
A takeover approach for rival U.K. pub operator Whitbread is one of the options that has been reported. Keeping the brewing unit would have stopped Bass from expanding its share of the country's pub industry, because of regulatory limits on pub ownership by brewers. The U.K. beer market has shrunk by around 10 percent over the past decade but has been marked by a shift towards more expensive beers.
The world's leading hotel operator by number of rooms, Bass may also use the cash raised to buy rival hotel companies to add to its existing chains, which include Holiday Inn and Inter-Continental. 
World No. 2
Buying Bass Brewers, Britain's second-largest brewing business, gives Interbrew the U.K. company's Bass Ale and other favorite beers, such as Carling and Caffrey's, to go with its own Stella Artois and Labatt brands, putting it in the leading position in the U.K. market. It also makes the Belgian company the world's second-largest brewer, overhauling Heineken of the Netherlands but still behind U.S.-based Anheuser-Busch (BUD: Research, Estimates).
"We are very pleased with this transaction," Interbrew chief executive Hugo Powell said in a statement. "We are clearly the best partners for Bass Brewers."
Family-owned Interbrew, which recently bought Whitbread's (WTB) brewing business for £400 million, won the Bass beer division in the face of a challenge from Heineken, Denmark's Carlsberg and London-listed South African Breweries (SAB).
Bass competes with U.S.-based Cendant (CD: Research, Estimates) for leadership in the global hotel market. The U.K. company, which runs 2,900-plus hotels with some 500,000 beds, bought the Inter-Continental chain for £1.8 billion in March 1998, and Chairman Ian Prosser has made it clear he plans further growth in the international hotel business.
Media reports in Britain in recent days speculated Bass was considering buying U.S.-based real estate investment trust Starwood Lodging (HOT: Research, Estimates), which operates the Sheraton, Westin and St. Regis hotel brands. 
-- from staff and wire reports
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