USA: Latrobe Brewery purchase still uncertain

Negotiations to sell Latrobe Brewing Co. to an unnamed buyer have hit a snag as two prominent brewers mentioned as potential buyers appear to be fading from the picture, The Pittsburgh Tribune-Review posted June 15.

InBev USA said last week the company is negotiating a letter-of-intent with an undisclosed company and indicated a deal would come this week.

On June 14, InBev notified Gov. Ed Rendell that its attorneys and those for the prospective buyer are having problems ironing out details, said Allen Kukovich, director of Rendell's Southwestern Pennsylvania office.

"They're serious about this," Kukovich said. "They're working it out and hope to have the letter signed by Friday, and no later than Monday."

Last month, InBev sold Latrobe Brewing Co.'s Rolling Rock brands to Anheuser-Busch for $82 million, a deal that did not include the plant. If the plant is not sold by July 31, InBev said it will close the facility and leave 200 workers jobless.

Meanwhile, the chief operating officer for D.G. Yuengling & Son of Pottsville, Schuylkill County, said yesterday it already operates three breweries and is not actively seeking to add beer-making capacity.

"It's not us who is moving close to a deal. We already have a lot on our plate. But we never say never," said David A. Casinelli, who pointed out the company operates two breweries in Pottsville and bought a former Stroh's plant in Tampa, Fla., in 1999.

The other potential suitor, Boston Beer Co., was believed to be a serious candidate due to opposition to its proposal to build a brewery in Freetown, Mass. Another potential problem involved a source for water.

However, voters in Freetown approved June 12 a lucrative tax-increment financing proposal, an agreement that will give Boston Beer tax breaks averaging 33 percent for 20 years, said John S. Ashley, chairman of the Board of Selectmen in Freetown.

Ashley said Boston Beer promised the new brewery would create 75 jobs by 2008.

"It's front-loaded, so they get big breaks at the beginning. They said they wouldn't build it unless they got one. If we didn't give them one, other towns will," Ashley said.

"This is like a nightmare. They're not a welcome neighbor. We're not against corporations, but Boston Beer is wealthy and doesn't need tax dollars," said Jeanne Tierney, a member of Freetown's school committee, who opposed the financing plan.

Tierney also said Boston Beer needs about 500,000 gallons of water daily from nearby Fall River, which she said would require costly infrastructure developments in Freetown.

But water will not be a problem, said Jim Terrio, director of the Fall River Water Department.

Terrio said Boston Beer's thirst for about 450,000 gallons of water daily can be accommodated, as the plant sells Freetown about 150,000 gallons daily and has more than 2.4 million gallons of excess withdrawal capacity available.

Terrio said the plant uses 16-inch lines and agreed that Freetown would have to make infrastructure improvements because he cannot sell water directly to Boston Beer. "Yes, they have some infrastructure issues ... but we're not talking about Hannibal crossing the Alps," Terrio said.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .