Belgian brewer Interbrew has suffered a setback for plans to streamline its US operations after the US Court of Appeals refused to overturn a ruling to prevent the company from merging two of its distribution operations.
The court ruling acknowledged that its Mexican partner, FEMSA Cerveza, the minority shareholder in Labatt USA, has a veto right over certain significant related-party agreements between Labatt USA and the Interbrew Group. It was because of these existing agreements that the courts decided they could not overturn the decision.
Interbrew's original attempt to merge the distribution channels was thwarted back in May 2002 because FEMSA said it had not been properly consulted about the decision.
Interbrew said that it will not pursue any further appeal of the decision. The company also said that the decision will not affect the day-to-day management of its American operations. Anticipating this possible outcome, the company added that it had already restructured the channels of distribution in the US, including those for Bass Ale, in agreement with FEMSA Cerveza.
However, the decision does not tackle Interbrew's specific problem with FEMSA's distribution inefficiencies in North America, so further action is still expected to be followed up by Interbrew.
Interbrew added that the decision is not expected to have any financial impact on its financial operations for this year.
Interbrew spokesman Corneel Maes said that the company was in talks with Femsa, but declined to say whether it was still trying to convince its partner to allow the merger to proceed.
Meanwhile the company has announced that Stefan Descheemaeker has been appointed Zone President for US and Latin America, and will continue to have three direct reporting lines: the CEO of Labatt USA, the CEO of Beck's North America and the executive in residence within FEMSA Cerveza.