Minneapolis financier Irwin L. Jacobs yesterday dropped his plans to purchase Pabst Brewing Co. and to sell a major portion of the company to rival G. Heileman Brewing Co.
Jacobs said he was abandoning the Pabst-Heileman plan because of the Justice Department's announcement on Thursday that it would oppose the deal on antitrust grounds.
But Jacobs--who has mounted several attempts to take control of Pabst in recent months--vowed to continue his fight for the company.
And Heileman officials, whose attempts to merge with other brewers now have been stymied three times by the Justice Department, said the department's decisions were increasing the domination of the beer business by industry giants Anheuser-Busch Cos. Inc. and Miller Brewing, which is a division of Philip Morris Inc.
Jacobs, who already owns 16.3 percent of Pabst, proposed to purchase the Milwaukee-based brewer for $196.5 million and then sell its East Coast operations and the rights to the Pabst name in that area to Heileman for $135 million. Heileman was blocked by the Justice Department earlier this year from making an outright offer for Pabst.
The Justice Department said Jacobs' proposal would curtail competition between beer makers in midwestern and eastern markets, weaken the part of Pabst that was not sold to Heileman, and create additional antitrust problems of "interdependence" because Heileman would be marketing the Pabst brand in the East while competing with Pabst in the West.
Jacobs said in a statement that he and his partners were "exploring various alternate means" to win control of Pabst, "including increasing their equity position by tender or other purchases."
Jacobs also reiterated his opposition to Pabst's plan to merge with Olympia Brewing Co. and said he and his partners would attempt to get a court order to halt the proposed combination.
In a separate action, the Pabst-Olympia merger was halted temporarily this week by a federal district court judge in Delaware pending the clarification and correction of some financial disclosures related to the merger plan, but the judge said the problems could be resolved easily.
The beer industry has been rife with mergers in recent months as medium-sized brewers have joined forces in an attempt to gain ground on Anheuser-Busch--which makes Budweiser--and Miller.
Heileman, the nation's fourth-largest brewer last year, has been blocked by the Justice Department from merging with Pabst and Jos. Schlitz Brewing Co. Schlitz has since merged with Stroh Brewery Co. Beer industry analysts say Heileman may be too large to acquire another brewer without antitrust problems, but not large enough to compete effectively with Anheuser-Busch and Miller without a partner.
Heileman Chairman Russell G. Cleary said yesterday that Heileman is the only company able to mount a serious challenge to Anheuser-Busch and Miller.