InBev Makes Move in Canada

Bids for Lakeport Brewing.

Seeking to expand its Canadian footprint, InBev has made a friendly offer worth $171 million to acquire Ontario’s Lakeport Brewing.

The offer by InBev, the parent of Canadian brewing giant Labatt, represents a 36 percent premium on Lakeport’s January 31 closing price.

Bloomberg has a story.

Lakeport competes in the value segment of the Canadian beer industry and has affected the pricing environment in Ontario. It commands about 10 percent share of Ontario’s beer market and 3.5 percent of national share, according to a note from Stifel Nicolaus analyst Mark Swartzberg.

Swartzberg and other analysts gave the deal a thumb’s up.

Bear Stearns analyst Carlos Laboy said the deal would “reintroduce order to the Ontario marketplace where Lakeport has been taking share with its value brands from the two market leaders.” He added that it’s not good news for the other big player in Canada, Molson Coors Brewing Company.

He wrote:

On the surface, seeing a discounter that was eating their lunch disappear may seem positive. But the fiscal advantages for Lakeport appeared threatened anyhow and instead of passively waiting for them to fade, Molson must now deal with a stronger Labatt.

Because of Labatt’s scale, the deal needs to receive approval from Canadian antitrust authorities.