Interbrew pays £332m for Löwenbräu maker

Interbrew agreed to buy the maker of Löwenbräu beer yesterday as part of a €477m (£332m) deal that will make the Belgian company the largest brewer in Germany.

Interbrew is to buy the brewing assets of Gabriel Sedlmayr Spaten-Franziskaner Braeu in a cash and paper deal.

The deal will push Interbrew's share of the highly fragmented German market up from 8 per cent to 11 per cent, past the current leader Holsten. The company already boasts a range of beers in Germany including Beck's.

"It's an important step forward for us," said John Brock, Interbrew's chief executive, in Munich. "With this transaction, we strongly expand and reinforce our position."

Although Germany is one of the world's largest beer markets it is still highly fragmented among some 1,200 brewers, many of whom service only their immediate surrounding area. But it is slowly consolidating as the world's leading brewers jostle for a leading position.

Local brands are seen as the key to expansion, since Germans generally turn up their noses at imported beer and remain fiercely loyal to what they see as their local brews. Imports have only 3 per cent of the market.

According to some, the Löwenbräu brewery's history goes back to 1383, although the Löwenbräu name didn't appear in the Munich brewers' registry until 1746. The company also brews Franziskaner, a leading Bavarian wheat beer.

Interbrew's purchase not only gives it an entry into southern Germany, but also a foothold in the fast-growing weiss or wheat beer segment with Spaten's Franziskaner.

Under the terms of the deal, Spaten will spin off its beer assets into a new company as it abandons brewing after 640 years to focus on real estate. The assets will be combined with Löwenbräu's in Interbrew Deutschland. Spaten is controlled by a small group of families who will receive a 13 per cent stake in Interbrew's German business as a result.

Mr Brock also said he would consider buying other brewers, but ruling out buying Brau und Brunnen from HVB Group

Shares in Interbrew ended 0.33 per cent higher at €21.29.