Colombia: The Netherlands brewing force, Heineken N.V. is in talks with Colombia's biggest brewer, Grupo Empresarial Bavaria, about a possible acquisition as global beer companies race to tie up with South America's largest remaining independent brewer, Reuters cited two sources familiar with the situation on Tuesday, March 8. A source at Bavaria said a group of executives from Heineken had visited the company's head office in Bogota on Tuesday, March 8, though he declined to comment on whether there was a bid.

A source with the Santo Domingo Group, which owns 70 % of Bavaria, said Heineken had made a firm offer. He said the figure was around $9 billion, though it was unclear how such a deal would be structured, whether through cash or shares or a combination, or whether it would include debt. The company reported net debt of more than $1.7 billion as of Feb. 28. The Santo Domingo Group source was not available for further comment. The Santo Domingo Group source said Bavaria's majority stockholders were analyzing and discussing Heineken's offer.

Bavaria, whose brands include Aguila, Cristal and Pilsener, said last month it was looking for a foreign partner. Previously, sources had tipped London-based SABMiller and Belgium-based InBev as favorites to tie up with Bavaria, which has a market capitalization of around $4.9 billion, Reuters commented.

Bavaria's shares have risen nearly 68 percent on Colombia's stock exchange this year since speculation started that Bavaria was considering a merger or alliance with a global brewer.

Bavaria is the largest remaining independent brewer in South America after Interbrew's takeover of AmBev last year that formed InBev. It has a virtual monopoly in Colombia, Peru and Ecuador, and it has an 80 % market share in Panama. Industry researcher Canadean ranked Bavaria as the world's 14th-biggest brewer, producing 22 million hectoliters (or 2.2 billion liters) in 2003, far behind world leader InBev with 139.7 million hectoliters. Bavaria posted a loss of 87 billion pesos ($37.6 million) in 2004, compared with a profit of 97.9 billion pesos in 2003. The company said results were hit by the appreciation of the Colombian peso, which caused an accounting loss on its foreign holdings.