Colombia, Bogota: The president of Colombian brewer, Grupo Empresarial Bavaria, confirmed on February 24 that the company is interested in a possible merger or a strategic partnership with a major world competitor. Ricardo Obregon, company’s President, said one of the firm's majority shareholders, Energetic and Financial Investment, hired an investment bank to shop around for possible suitors, Associated Press commented. "Our shareholders have informed the company's management ... that they have been exploring a series of alternatives, which could include a merger or a search for a strategic partner," Ricardo Obregon told local radio.

In January this year, reports said that some foreign companies, including South Africa's SABMiller, InBev of Belgium and Heineken of the Netherlands, had begun preliminary talks to acquire Bavaria in a deal that could be worth US$9 billion (euro6.79 billion).

"Selling Bavaria sounds extreme. (But) what we observe are merger processes and stock swaps that we don't rule out," Obregon told Caracol radio. According to Associated Pres, Obregon said Bavaria has received visits to its Bogota offices from several companies in the past year, but he declined to name them. "I would prefer not to mention specific names. But Bavaria has been on the radar screens of many beer multinationals for one or two or three years and so I can say that the leading companies would be interested in seeking some sort of negotiation with the company," Obregon said.

Bavaria stock jumped 15 % to 45,020 pesos after Obregon's comments, from 39,000 pesos at the close on Wednesday, February 23, according to Reuters’ statement. The Colombian Stock Exchange briefly suspended trading in the shares. Bavaria's shares have risen 64 % on Colombia's stock exchange this year, since sources said Bavaria was considering a merger or alliance with a global brewer. They said London-based SABMiller and Belgium-based InBev were favorites.

A buyer could offer from $6 billion to $7 billion for the brewer of such beers as Aguila, Cristal and Pilsener, the sources said in January. SABMiller, the world's third-biggest brewer after InBev and Anheuser-Busch, declined to comment. InBev downplayed the reports.

Bavaria, founded in the 1880s by German immigrants, is controlled about 70 % by New York-based Colombian magnate Julio Mario Santo Domingo. Bavaria is the largest remaining independent brewer in South America after Interbrew's takeover of AmBev last year that formed InBev, according to Reuters. It is the virtual monopoly brewer in Colombia (95%), Peru and Ecuador, and has an 80 % market share in Panama.

Industry researcher Canadean ranked Bavaria as the 14th biggest brewer, brewing 22 million hectolitres, or 2.2 billion liters in 2003, far behind worldwide leader InBev with 139.7 million hectolitres.

The global industry has been consolidating for years as brewers look to take advantage of economies of scale and to enter fast-growing emerging markets to offset more sedate levels of growth in developed countries.

Bavaria posted a loss of 87 billion pesos ($37.6 million) in 2004, compared with a profit of 97.9 billion pesos in 2003, it said on Wednesday. While it gave no explanation for the variation, it said last year that its results were being hit by the appreciation of the Colombian peso, which caused an accounting loss on its foreign holdings.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .