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Foreign-owned Labatt bids on local Lakeport

The Story

Lakeport's "buck-a-bottle" strategy has attracted a megabucks takeover bid. On Feb. 1, 2007, Canada's largest beer manufacturer, Labatt Brewing Company Ltd., places a bid on the Hamilton-based brewery for a staggering $201.4 million. Although the takeover signals a probable gain for shareholders, it leaves a bitter taste in the mouth of consumers who worry it may mean the end of cheap beer. 

Medium: Radio
Program: The Business Network
Broadcast Date: Feb. 2, 2007
Guests: Teresa Cascioli, Neil Sweeney
Reporter: Tracy Johnson
Duration: 4:47

Did You know?

• Ontario-based Lakeport Brewing Income Fund gained popularity through 2006 mainly due to its "24 for $24" selling strategy. Of its nine proprietary beer brands, two became top sellers in the province- Lakeport Pilsner and Lakeport Honey Lager.

• Labatt Brewing Company Ltd. became interested in acquiring the Hamilton-based brewery because Lakeport's discount beer proved stiff competition to its own more costly brands. "Lakeport has had great success growing their brands in the value segment of the highly competitive Ontario beer market," said Miguel Patricio, president of Labatt's North American operations. "We look forward to building on Lakeport's success in this area".

• The Lakeport purchase was the second major brewery takeover in less than a year. In late 2006, Canadian-owned Sleeman Breweries accepted a $400-million buyout offer from Japanese beer manufacturer Sapporo Breweries.

• Labatt's offer of $28 per unit was called "exceptional" by Lakeport chair Teresa Cascioli. Lakeport's Board of directors "unanimously determined that the offer is fair to unit holders and in the best interests of the fund," and recommended shareholders accept the offer.

• There was speculation the takeover would spell the end of the "buck-a-bottle" phenomenon. But Neil Sweeney, spokesperson for Labatt, remained vague. "It's premature to discuss anything like that."

• As the takeover was getting under way, the federal Competition Bureau asked for more time to review the bid. But at the end of April, the Competition Tribunal ruled that the takeover should proceed as scheduled. The Competition Bureau has appealed that ruling, however, noting that it needs sufficient time to review the acquisition. "We are working to ensure that Canadian consumers benefit from lower prices and consumer choice," said Melanie Aitken, the acting senior deputy commissioner of competition, in an April news release.



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