AB InBev sells Labatt unit to KPS Capital to meet US regulatory norms

Beer giant Anheuser-Busch InBev NV, formed in a $52 billion merger between US brewer Anheuser-Busch and Belgium's InBev NV last year, will sell its unit in Labatt, US, to KPS Capital Partners LP, to address regulatory concerns over beer market domination.

AB InBev NV, based in Leuven, Belgium, needs to offload its stake in LaBatt in order to receive approval from the UD Department of Justice for its merger of St Louis-based Anheuser-Busch Companies Inc.

The merger created the world's biggest brewer and united brands from Stella Artois to Budweiser. The Justice Department approved the deal in November on condition that the merged company sell the Buffalo-based Labatt USA unit. Labatt Brewing, founded in London, Ontario, in 1847, expanded to nearby western New York state before it was sold to InBev predecessor company Interbrew in 1995.

The company did not reveal the sale price or the terms of the deal. The US government must sign off on the Labatt sale as well.

AB InBev's Canadian arm Labatt Brewing Co is also granting KPS the use of its brand in the US – allowing it to brew beers, including Blue and 50, on the US company's behalf for up to three years. The deal, however, will not affect Labatt's Canadian operations.

InBev USA is currently the exclusive importer in the US of Labatt beer, which is brewed by Labatt Brewing Company Ltd, now a Canadian subsidiary of Anheuser-Busch InBev.

The acquisition of Anheuser-Busch, which runs a dozen US breweries, including one in north Columbus, in November last year, made InBev one of the world's five largest consumer product companies. Anheuser-Busch's Columbus brewery employs 665 workers.

Buy-out firm KPS, which manages $1.8 billion, is operating a beer company of its own,  called North American Breweries. It is also buying the  brewer of Genesee beer, High Falls Co, and acquiring Pernod Richard SA's licences for Seagram's coolers.