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Scottish
& Newcastle rejects improved bid from Carlsberg and Heineken
16 November 2007 Scottish
and Newcastle(S&N), the Edinburgh-based British brewer, has rebuffed an improved
takeover bid from rivals Carlsberg and Heineken, who have ganged up to acquire
its business. (See: Brewers
Carlsberg, Heineken gang up against Scottish & Newcastle; S&N taking evasive
action) S&N's
rivals, beer-makers Carlsberg of Denmark and Heineken of the Netherlands' had
upped their initial offer of 720 pence to 750 pence per share for S&N, which
the UK brewer dismissed as its rivals attempts to buy it "on the cheap",
while rejecting the offer as "wholly inadequate". In
a communiqué, S&N said, "Scottish & Newcastle plc has today
received and rejected a highly conditional proposal from Carlsberg A/S and Heineken
N.V., to make a marginally increased offer for S&N at 750 pence per share." John
Dunsmore, chief executive, S&N, said, "The consortium's proposal significantly
undervalues S&N's brands and market positions. We particularly object to Carlsberg's
refusal to allow agreed information about BBH's prospects to be released." The
two raiders said that their new offer valued S&N at an equity value of £7.3
billion, placing an enterprise value of around £9.7 billion. Jean-Francois
van Boxmeer, chairman and chief executive Heineken, said that the increased offer
represented "a very attractive opportunity for S&N shareholders to obtain
a price which is materially higher than the standalone value of the group,"
Bluntly rejecting
van Boxmeer's contention, Sir Brian Stewart, chairman of S&N charged, "Carlsberg
and Heineken's marginally increased proposal continues their attempt to get S&N's
unique portfolio of businesses on the cheap. The board is highly confident in
the actions being taken to maximise shareholder value, and strongly urges shareholders
to take no action." If
they succeed, the two raiders plan is to split the company with Heineken taking
control of S&N's main business in the UK and some other European markets,
while Carlsberg would take over the operations in France and Greece. In
the bargain, Carlsberg would also gain full control of Russia-based brewer Baltic
Beverages Holdings (BBH), a key S&N asset that controls over 85 per cent of
Russia's biggest brewer Baltika, in which S&N and Carlsberg have an equal
ownership. Under
a clause in the agreement between the two joint venture partners, if one declines
to accept the other's offer to sell out its 50 per cent stake in the joint venture
at a set price, then it is entitled to buy out the other's stake at the same price.
 If
Carlsberg were to push S&N to sell its 50-per cent stake in BBH, it could
end up with S&N making a counter offer to buy-out Carlsberg's own stake in
Baltika. For Carlsberg it was safer to bid for S&N itself to gain control
of Baltika and divest the rest of the company, in this case to its consortium
partner.
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