London brewer Fuller's has agreed a deal to acquire rival family brewer George Gale.
The move values Hampshire-based Gales at £91.8m in total, with Fuller's paying £82.7m for the outstanding shares.
A question mark was immediately put over the future of the Gales' brewery in Horndean. Fuller's plans a 'complete review' of all operations before deciding whether to transfer production to the Griffin Brewery in Chiswick.
With a strong portfolio of its own beers, including London Pride and recent launch Discovery, Fuller's main interest is undoubtedly Gales' 111 pubs. However, the company indicated it would keep at least some of Gales' beers, with premium brand HSB the likely front-runner.
The Horndean brewery has a maximum capacity of 50,000 barrels, meaning its output could be accommodated at Fuller's 260,000-barrel Chiswick site without causing too many production headaches. However, a closure would damage Fuller's standing with the real ale lobby.
Michael Turner, Fuller's chief executive, said the Gales estate "can be brought into the Fuller's estate with little adaptation," while its beers include "a number of well respected brands which will enhance our ale portfolio."
He added: "The board has identified Gales as a core acquisition target for Fuller's as it believes that a combination of these two highly regarded, geographically complementary regional operators will deliver improved shareholder value."
Charles Brims, chairman of Gales said: "This is an attractive proposal for Gales shareholders. Although it is always sad when a long-established family business decides to sell, I am confident that this decision is right for Gales shareholders and right for the business."
The move continues the wave of consolidation that has swept the regional brewing sector this year. Other high profile deals over recent months have seen the acquisition of Lake District brewer Jennings Brothers by Wolverhampton & Dudley Breweries, while both Belhaven in Scotland and Essex-based Ridley's have been snapped up by Greene King.
Fuller's has been in the market for a major expansion of its estate for several years, and first approached Gales three months ago. Mr Turner told news agency Reuters: "This isn't the end of our ambitions."
With Gales operating a complex share structure to retain family control, Fuller's is offering 4421p for each Gales Ordinary Share, 1160p for each Gales 'A' Share and 1200p for each Gales Preference Share.
With Gales' board backing the takeover, Fuller's already has support equivalent to 80.6 per cent of the voting rights, making the shareholder meeting needed to approve the deal little more than a formality.
CAMRA vows to fight to protect Gales' brewery (8 November 2005)