Stroh completes Heileman acquisition Uncertain future for Halethorpe plant

July 02, 1996|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

The Stroh Brewery Co. announced yesterday that it has completed its acquisition of the hobbling G. Heileman Brewing Co. in an estimated $290 million merger that will give the combined company control over about 10 percent of the U.S. beer market.

The deal, announced in February, is expected to reinforce Stroh's position as the nation's No. 4 beer maker in a flat industry, giving the Detroit-based company a broader portfolio of national and regional brand-name beers, and what it hopes is an opportunity to cut costs and expand its distribution network and international sales.

"It's concluded as expected," Stroh spokeswoman Lacey Logan said of the acquisition. "It's a very exciting time for Stroh. It provides us significant opportunities and strengthens our business overall."

What the deal will do for Baltimore, however, is less clear. Heileman, whose administrative offices are concentrated in La Crosse, Wis., operates one of its five breweries in Halethorpe. That unit employs about 400 workers.

Logan said, "It's really too early to predict any changes that may occur."

Stroh is acquiring a highly leveraged company, but one whose operations were not considered a liability. In addition to the Baltimore brewery, Stroh is acquiring Heileman breweries in LaCrosse; Portland, Ore.; Seattle; and San Antonio, plus a beverage manufacturing plant in Perry, Ga., and the Heileman brands, which include Special Export, Old Style, Rainier, Henry Weinhard, Schmidt's, Lone Star, Champale, Colt 45 malt liquor, National Bohemian and Mickey's.

Under the agreement, Stroh, which makes beer under its own name and the Old Milwaukee, Schlitz, Schaefer and Schlitz Malt Liquor brands, is retiring Heileman's bank debt and assuming its other liabilities.

Stroh will operate with less debt as a combined company than Heileman did as a stand-alone brewery and will assume about $87 million in employee retirement, health care and pension obligations and assume trade debt that stands at about $50 million, according to documents filed recently by Heileman in U.S. Bankruptcy Court in Wilmington, Del.

The purchase price includes about $210 million in cash that Stroh will use to pay off Heileman's bank creditors and up to $75 million in new notes that Stroh will issue to Heileman's bondholders, who are owed about $170 million. Heileman filed for bankruptcy protection in April, a move intended to pave the way for Stroh's acquisition.

Pub Date: 7/02/96

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