Scottish and Newcastle, Interbrew and Anheuser-Busch of the United States lead the race to buy Germany's biggest beer exporter and second biggest brewer, Beck's, according to sources.
However, at least one City observer believes other international brewers could afford to pay much more than S&N can to gain control of Beck's.
The winner will have to pay upwards of £600m for the family-controlled company, whose beer is distributed in the UK by S&N. Britain is by far the brand's biggest market outside Germany, and the contract is believed to have around 10 more years to run. Beck's is one of S&N's five key brands, along with Foster's, John Smith's, Kronenbourg and Miller.
Although Interbrew is interested in Beck's, there could be potential UK regulatory problems for the Belgian brewer, already in the middle of a long-running regulatory battle over the future of its Bass Brewers.
Interbrew's Stella Artois beer is Britain's best-selling premium packaged lager, followed by Anheuser-Busch's Budweiser and then Beck's. A combination of any two of these could prompt the Competition Commission in Britain's to step in and block the deal.
Anheuser-Busch has been relatively cautious in its European expansion strategy, with its operations largely limited to its Budweiser brewery at Mortlake, in South West London.
However, Stuart Price of the City finance house WestLB Panmure said: "Other international brewers offer better synergies and can therefore afford to outbid S&N even for a minority stake.
"Heineken, which is seeking to buy 10 German breweries, offers better synergies and could take the deal above £600m.
"Heineken is number one in Italy and Spain, number in France and number one inthe US imported beer market,with 29% share versus 5% for Becks. It is not only more of a brand manager than S&N, but also, with cash interest cover of 41x against 7.5x for S&N, has the cash available to invest.
"In our opinion, Anheuser-Busch, Carlsberg, Interbrew, and South African Breweries also offer better synergies than S&N. With a prize as big as Becks on offer, we would expect S&N to have to overpay - as it did with Kronenbourg."
However, at least one City observer believes other international brewers could afford to pay much more than S&N can to gain control of Beck's.
The winner will have to pay upwards of £600m for the family-controlled company, whose beer is distributed in the UK by S&N. Britain is by far the brand's biggest market outside Germany, and the contract is believed to have around 10 more years to run. Beck's is one of S&N's five key brands, along with Foster's, John Smith's, Kronenbourg and Miller.
Although Interbrew is interested in Beck's, there could be potential UK regulatory problems for the Belgian brewer, already in the middle of a long-running regulatory battle over the future of its Bass Brewers.
Interbrew's Stella Artois beer is Britain's best-selling premium packaged lager, followed by Anheuser-Busch's Budweiser and then Beck's. A combination of any two of these could prompt the Competition Commission in Britain's to step in and block the deal.
Anheuser-Busch has been relatively cautious in its European expansion strategy, with its operations largely limited to its Budweiser brewery at Mortlake, in South West London.
However, Stuart Price of the City finance house WestLB Panmure said: "Other international brewers offer better synergies and can therefore afford to outbid S&N even for a minority stake.
"Heineken, which is seeking to buy 10 German breweries, offers better synergies and could take the deal above £600m.
"Heineken is number one in Italy and Spain, number in France and number one inthe US imported beer market,with 29% share versus 5% for Becks. It is not only more of a brand manager than S&N, but also, with cash interest cover of 41x against 7.5x for S&N, has the cash available to invest.
"In our opinion, Anheuser-Busch, Carlsberg, Interbrew, and South African Breweries also offer better synergies than S&N. With a prize as big as Becks on offer, we would expect S&N to have to overpay - as it did with Kronenbourg."
