would begin cooperating in a variety of ways ahead of a merger at an unspecified time in the future. "We intend to resist this with everything we have," Bass country manager for the Czech Republic Graham Staley told Reuters. Rumours had been circulating in the local press that such a move was in the offing. Bass made clear that it would vigorously oppose any such merger. Bass has been gradually increasing its presence in the Czech beer market since 1993 and holds a 55 percent stake in the third biggest brewery, Prazske Pivovary, which has a 14 percent market share. The ownership structure of the two breweries proposing to merge is complicated. IPB a.s., the third largest Czech bank, votes in consort with a group of shareholders which together have a controlling stake in both Plzen-based Pradzdroj and Radegast, which is based in north Moravia. However, IPB stands in the shadow of Japan's Nomura International which is awaiting the acquisition of a majority stake in the bank after winning a government tender in late July. In issuing its warning on Wednesday, Bass was clear in directing its wrath at Nomura. To further complicate matters, Bass's one-third stake in Radegast makes it the largest single shareholder in the Moravian brewer. Bass acquired the stake earlier this year in the long-term hope of creating its own mega-brewery by possibly combining it with Prazske Pivovary. In announcing the planned merger, IPB said that it would be seeking the advice of the Czech Competition Office as well as other shareholders.

The Czech Republic is the world's largest per capita consumer of beer and Czechs are proud of their centuries old brewing tradition. Despite this, the industry is not yet profitable mainly because, at an average retail price of between 15 and 30 pence a pint, beer is so cheap. Bass has long said that it sees great potential for Czech beer in lucrative export markets in western Europe.