Sleeman Breweries Ltd., Canada's third-largest beer producer, agreed Friday to a $400-million takeover by Japan's Sapporo Breweries Ltd.

Sapporo will offer $17.50 a share in cash to buy Sleeman, which put itself up for sale earlier this year and had been weighing offers for the company. The total figure for the deal includes debt.

Sleeman shareholders have been asked to approve a takeover bid from Sapporo.

Chairman and CEO John Sleeman agreed to tender all of his shares to the bid, according to a joint release.

"In Sapporo's offer, we not only received fair value for shareholders, but confidence that Sleeman has an owner with the financial resources and track record to continue to grow and build Sleeman's national portfolio of premium brands," Sleeman said.

"This transaction will allow Sleeman to be more competitive in the premium beer category and continue to build the business. Today's announcement also provides a strong future for both Sleeman employees and Sleeman brands."

Sleeman announced Thursday that profit rose 41 per cent in the second quarter to $3.5 million, or 21 cents a share. But revenue was essentially flat, at $57.8 million.

The company's shares fell 21 cents on Friday, closing on the Toronto Stock Exchange at $14.83.

It markets and distributes imported brands like Sapporo, and has also provided contract production for the Japanese brewer's products. 

"We have developed a strong relationship with Sleeman through our contract brewing arrangement and this acquisition enables Sapporo to continue to expand Sleeman's quality brewing heritage," said Nobuhiro Hasiba, Sapporo managing director.

Should two-thirds of Sleeman shareholders approve the deal, the transaction is expected to close by mid-October. 

Last of the top three

If approved, Sleeman would become the last of the top three Canadian brewers to accept foreign ownership.

Sleeman, based in Guelph, Ont., brews a wide range of beers, from the premium Sleeman and Upper Canada brands to low-cost, high-volume "value brands." The company traces its roots back to 1834 when founder John H. Sleeman established himself as a brewer.

Sapporo was established just a few decades later. Sapporo Holdings Limited has a value of $4.3-billion, which also includes real estate, restaurant and non-alcoholic beverage segments.  

It had been rumoured that Molson Coors Brewing Co., Labatt Brewing Co. Ltd. and Royal Grolsch NV of the Netherlands were also interested in Sleeman.