G. Heileman Brewing Co.'s persistent efforts to gain ground on its larger competitors in the beer industry were finally rewarded yesterday when the La Crosse, Wis.-based brewer won control of Pabst Brewing Co.

"Now we can all get back to what we do best," Heileman Chairman Russell G. Cleary said. "Sell beer."

Pabst President William Smith Jr. called the takeover, which ended a yearlong dispute for control of Pabst, "the best Christmas present I've ever had."

But while Heileman's victory ended the complicated battle over Pabst, it put into motion an equally complicated agreement with the Justice Department that will see most of Pabst reemerge as an independent company -- owned by shareholders of Olympia Brewing Co. Heileman will have no interest in the new company.

Heileman said Pabst shareholders had offered 6.73 million shares of the company to Heileman's $32-a-share offer, well over the 5.6 million shares Heileman sought and the 4.2 million it needed to gain control of Pabst. There are about 8.2 million shares of Pabst outstanding. Pabst management had supported the Heileman bid.

In gaining control of Pabst, Heileman turned away an offer for Pabst by San Francisco beer magnate Paul Kalmanovitz, who until recently was a partner in a competing attempt by Minnesota financier Irwin Jacobs to buy out Pabst. But Jacobs, a dissident shareholder of Pabst who had been trying for a year to oust Pabst's management and gain control of the company, switched allegiance to Heileman a few weeks ago, taking with him 1.1 million shares of Pabst stock. Kalmanovitz has filed a $90 million suit against Heileman and Pabst, who in turn have sued him.

Kalmanovitz, who owns the companies that make Falstaff and Pearl beer, had been offering $40 a share for 4.15 million shares of Pabst. He set that price Wednesday, up from his previous $32-a-share bid, after Heileman matched the original offer last week. But Kalmanovitz' increase apparently came too late; a Pabst spokesman said only about 500,000 Pabst shares defected from the Heileman offer to Kalmanovitz after he raised the ante.

Kalmanowitz had no comment on the Heileman announcement.

Under an agreement with the Justice Department, Heileman will not be able to keep all of Pabst, and must spin off most of the company, keeping only a handful of Pabst brand names--including Lone Star and Red White and Blue -- and three breweries.

The spun-off company, retaining the Pabst name, will be based in Milwaukee and owned by shareholders of Olympia. Pabst bought 49 percent of Olympia earlier this year. The "new" Pabst will brew beer under the Pabst and Olympia brands, and under some associated labels.

Heileman officials believe that even the small addition to their company's brewing and marketing capacity will help it compete in a market in which small regional brewers have been joining forces to do battle with industry giants Anheuser Busch Cos. Inc. -- maker of Budweiser -- and Philip Morris Inc.'s Miller division.

When all the deal-making is complete, Heileman will still rank fourth in the industry, behind Anheuser-Busch, Miller, and Stroh Brewery Co., which acquired Jos. Schlitz Brewing Co. earlier this year. But Heileman will be a bit closer to the leaders than it was before -- about as close as the Justice Department will probably allow, according to industry analysts. In particular, the acquisition will give Heileman access to the Sun Belt market.