Wednesday June 14, 12:03 pm Eastern Time
By David Jones
LONDON, June 14 (Reuters) - Britain's Bass Plc gave up over 200 years of brewing history on Wednesday to focus
on its global hotels and UK pubs after a decade of frustrated attempts at brewing expansion at home and abroad.
Bass pushed to expand its beer interests in the late 1990s in Britain, the Czech Republic and China with limited
success but decided to offload its beermaking operation to Belgium's Interbrew [ITB.UL], to focus on faster growing
hotel and pubs.
Interbrew beat off competition from Denmark's Carlsberg A/S , Dutch Heineken NV and London-listed South African
Breweries Plc (quote from Yahoo! UK & Ireland: SAB.L) in an auction to clinch a deal worth 2.3 billion pounds
($3.46 billion).
Bass is ending a 223-year connection with the beer industry, from when William Bass started brewing in England's
brewing capital of Burton-on-Trent in 1777, and following a period of consolidation during the 1960s moved into
pole position in UK brewing, overtaking then Allied-Lyons.
But it lost the top spot in British brewing when Scottish and Newcastle Plc (quote from Yahoo! UK & Ireland:
SCTN.L) snapped up Courage in 1995 and its attempt to bounce back two years later was blocked.
Then it attempted to buy UK brewer Carlsberg-Tetley, owned by Carlsberg, and although the deal was cleared with
conditions in 1997 by the then Monopolies and Mergers Commission, it was subsequently blocked by UK Department
of Trade and Industry Minister Margaret Beckett.
The deal could have put Bass into a commanding position in British brewing with its own market share of 24 percent
added to Carlsberg's 13 percent, placing it ahead of S&N's 30 percent.
But this would have created a large brewing group which owned a substantial pub chain and it was this increased
brewery-pub link-up which fell foul of the UK government.
Interbrew's deal with Bass follows last month's acquisition of Whitbread's (quote from Yahoo! UK & Ireland:
WTB.L) beer interests and the Belgian group now will have a leading 32 percent of the UK beer market.
On overseas expansion, Bass bought a majority stake in Prague Breweries in 1993, the loss-making Czech Republic
brewer, with a 13 percent share of the national beer market and brands such as Staropramen.
But Nomura merged Czech's two top brewers Pizensky Prazdroj, with its famed Pilsner Urquell, and Pivovary Radegast
last year and then sold the business with around 44 percent of the beer national beer market in October 1999 to
SAB.
The move forced Bass to sell its minority stake in Radegast and pushed the Prague Breweries into a distant number
two in the national market, and effectively blocked its expansion plans.
Bass's five-year foray into China ended last month as it sold its stake in its brewing joint venture to its Chinese
partner Ginsber, after a tough battle to establish itself.
When Bass started brewing in China in 1995, it took a 55 percent stake in a joint operation to brew Tennent's lager
beer in the north-east Chinese province of Jilin.
After these setbacks in expansion, Bass initiated a strategic brewing review in February, and then said in May
with half-year results that a sale of its beer division was the more likely outcome of the review.
Its UK operations include six breweries at Belfast, Glasgow, Tadcaster, Birmingham, Burton and Alton and distribution
operation, which together employ around 4,100. Adding the Czech Republic and its distribution and export businesses,
Bass employs around 5,300 people in brewing.
Bass owns all its main brands such Caffrey's, Worthington, draught Bass and Tennent's, plus the brewing rights
for the UK's best-selling beer Carling.