Labatt Brewing Company Ltd. has announced plans to take over Lakeport Brewing Income Fund.
Canada's largest beer maker will be acquiring the small Ontario company known for its "buck-a-beer" advertising campaign for $28 a share, cash.
The deal would be worth just over $201.4 million, The Canadian Press reports.
"Lakeport has had great success growing their brands in the value segment of the highly competitive Ontario beer market and we look forward to building on Lakeport's success in this area,'' said Miguel Patricio, the president of Labatt's North American operations.
"This announcement demonstrates our commitment to growing Labatt in Canada and ensuring that our consumers have as much choice as possible across all beer segments."
Lakeport's board of trustees has recommended unanimously that shareholders accept the offer.
CTV's Business Editor Linda Sims said Lakeport has carved out a solid niche for itself, and now holds 12 per cent of the Ontario beer market, making it an attractive purchase.
"Now everyone is wondering is this going to start a bidding war -- it might be that Molson might move in, somebody else, an international player, but so far the CEO has pledged her 21 per cent of the shares to Labatt," Sims told CTV Newsnet.
Lakeport chair and CEO Teresa Cascioli said Labatt's established place in the beer market, combined with the offer which provides a 36 per cent premium on share values prior to the offer, makes the deal too good to pass up.
"We are confident that Labatt has the financial resources to continue to grow the Lakeport brands. The Board and I, as a significant unitholder, believe this is in the best interests of our investors, employees and customers," Cascioli said.
Lakeport's units closed at $20.37 on the Toronto Stock Exchange Wednesday.
Both companies say they hope the transaction will be completed in the spring.
Labatt was founded in London, Ont. in 1847 and brews more than 60 brands.
The Hamilton, Ont.-based Lakeport produces nine beer brands and employs 200 people.
Just recently, Lakeport announced new additions to its product lineup, offering Honey Lager and Lakeport Light in 355 ml cans in six and 24-packs
"And we launched them at the lowest legal price. That's $10 below regular beer!" says a statement on the brewer's website.
"As well, throughout the LCBO we are now offering 473 ml cans of Lakeport Pilsener and Lakeport Honey Lager for $1.75" in addition to Lakeport Pilsener, Lakeport Light and Lakeport Honey Lager.
Lakeport describes itself as having "pioneered the value beer category."
With files from The Canadian Press
