Minhas offers $50m for Lakeport
Beer will be flowing in four months if accepted
April 23, 2010
Steve Arnold
http://www.thespec.com/News/Business/article/757107
Labatt has been offered up to $50 million for the beer-making equipment in its now closed Hamilton brewery.
The offer was tabled this week by Calgary-based Minhas Creek Brewing Company, a firm looking for a chance to break into the discount beer business in Ontario.
Company president Ravinder Minhas said if Labatt takes his offer he could have the Hamilton plant and its 143 employees shipping beer again within four months. The price, he added, is based on fair market value for the equipment in the plant.
"That's what we always thought it would be worth," he said in an interview. "We haven't had a response from them, but I suppose they have to run this up the chain first."
Minhas said the Hamilton plant could produce about 14 million cases of beer -- a fraction of the 88.8 million cases sold by The Beer Store in 2008. Labatt reportedly has about 45 per cent of the Ontario market, or 39.6 million cases a year.
"We'd be a minor player, we're tiny compared to Labatt," Minhas said. "In their position you'd think they'd do anything to keep their image from being tarnished to protect the sweet deal they have."
Labatt's image has been bruised in Hamilton since it announced March 30 the Lakeport brewery would be closed and production of its brands moved to London. Despite pleas from local groups to leave its production equipment behind so a craft brewer like Minhas could move in and save local jobs, the company has consistently said it needs the vats and tools at its other breweries.
At the same time, it has offered to give more than $2 million in lease and tax payments to any new occupant of the building, so long as the new tenant is not a brewer.
That has revived cries first raised in 2007 when Lakeport was sold to Labatt -- that the local success story was purchased by the foreign-owned giant for no other reason than to kill a competitor.
MPP Paul Miller repeated that allegation in the Ontario legislature Wednesday and yesterday, asking Consumer Services Minister Sophia Aggelonitis what she intends to do "to protect consumers from Labatt's attempts to establish a monopoly and kill good brewery jobs in Hamilton."
Aggelonitis is MPP for Hamilton Mountain. Miller represents Hamilton East-Stoney Creek.
In the legislature, Miller demanded to know, "Will the minister from Hamilton stand up for the community, under the auspices of her ministry, to protect consumers from Labatt's blatant attacks and (efforts to) stifle any brewery competition?"
Aggelonitis's only response was a personal jab at Miller, accusing him of failing to "lift up and start talking about Hamilton."
In response to the same questions Wednesday, Economic Development Minister Sandra Pupatello said the government's role in a case like this is to create the kind of business environment that will draw companies into Hamilton, not to "run rampant" over private firms.
Hamilton, she added, has suffered more than many communities during the recession and the provincial government is anxious to help in its recovery.
"We are doing everything we can to help Hamilton recover. When we have episodes like this with Labatt ... we want to work with Hamilton," she said. "We believe that if that site can be useful to another manufacturer or another business opportunity in that facility, we want to play a role in helping to facilitate that. And just for the record, that is exactly the role that my ministry is playing."
Labatt previously rejected an offer to take over the Hamilton plant by Rochester-based North American Breweries. It wanted the facility to brew Labatt products exclusively for export to the United States.
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