View from City Road: Courage could be good for Morris

PHILIP MORRIS of the US stands alongside Hanson in the perpetual, seething cauldron of takeover rumours. So yesterday's short-lived speculation about a takeover bid for Heineken would not have caused such a big stir but for the need and inclination of Morris to spend its cash mountain.

The need to expand overseas is there because Morris has become so big in the US that a large deal in its areas of brewing, tobacco and food would almost certainly run into anti-trust problems. The inclination is there - Morris has openly expressed its interest in Europe, and it has successfully carried off big deals - witness the pounds 2.2bn Jacobs Suchard buy.

But why would Morris even attempt to buy a family-controlled company like Heineken? The simple answer is that Heineken is a pure brewer - a field where Morris has excelled. Heineken is the world's second-biggest brewer, one notch above Morris's own set-up, Miller Brewing.

But Heineken yesterday clearly stated its intentions to remain independent, meaning that Morris will have to look elsewhere. And that elsewhere could well be Courage, the UK brewer owned by the financially tangled Fosters Brewing of Australia.

Rumours that Courage is going to be sold have been bubbling for some time. The list of potential suitors includes Guinness and, of course, Morris because of the fact that Courage brews Miller Lite under licence.

The likely pounds 1bn-plus cost of buying Courage is well within the capacity of Morris's pockets. But there is one grey area that would have to be looked at by the authorities - Courage's beer supply arrangements and Inntrepreneur Estates, the joint pub venture with Grand Metropolitan.