B&M finalises Interbrew purchase

Baker & McKenzie is completing an audacious Eastern European purchase for Interbrew, which is fighting the UK Government’s decision to force a sale of Bass.

The South African brewer has purchased an 81.4 per cent stake in Ukrainian-based Rogan Brewery via its joint venture with Indian brewers Sun Brewing Group, in which Interbrew has a 66 per cent interest.

The Baker & McKenzie team was led by London-based partner Jane Hobson, while Ukrainian partner Alexander Martinenko acted on the deal from the firm’s Kiev office.

The purchase of a stake in Rogan Brewery, the remaining percentage of which is owned by private investors and investment funds, will give Sun Interbrew a 34 per cent share of the region’s market. It owns three other breweries in the region

Martinenko says: “A 35 per cent control of the market is viewed as a monopolistic control under Ukrainian competition rules.” He says, though, that one can exceed that figure provided the deal is reviewed by the relevant authority in the region.

In the UK Interbrew is expected to file for a judicial review of the forced sell-off of Bass, which it bought last year for £2.3bn after purchasing Whitbread’s brewing business for £400m. Simmons & Simmons acted for Interbrew on both acquisitions. The Secretary of Trade and Industry Stephen Byers decided to block Interbrew’s purchase of Bass after the Competition Commission identified potential adverse effects of the purchase.

After the deal was referred back from Brussels, the commission found that the purchase of Bass, just one month after that of Whitbread’s brewing business, gave it a 33-38 per cent share of the UK market.

While it looks unlikely that Byer’s decision will be overturned, Interbrew is hoping to gain more time to sell Bass so as to make it a more attractive proposition for bidders.

Martinenko says that the circumstances in the UK have no bearing on Sun Interbrew’s activities in the Ukraine. Although he says that the Ukrainian anti-trust authority extended the usual one-month deadline to examine the purchase of Rogan “from every angle”.

Martinenko says: “We filed it in the summer, and in complicated circumstances the anti-trust committee is obliged to extend the period by two months. The most recent round of negotiations went on for about six to eight months.

“The negotiations with the vendor were quite tough and quite long, but they gave consent on the business points and all the appropriate legal structures were reached.”