Scottish & Newcastle to emerge leaner tougher as it vows to thwart Carlsberg - Heineken bid

Edinburgh-based brewer Scottish & Newcastle, the target of a combined bid from Carlsberg of Denmark and Heineken of the Netherlands and has unveiled a strategy to thwart the takeover and, in the process, become "leaner" through measures that include the sale of its loss-making wholesale unit in France that supplies Kronenbourg beer to French bars to C10, France''s largest independent beer wholesaler, for £85 million - a move opposed by Heineken - and an agreement to produce its beer at the Molson Coors plants to cut down costs in the UK.

It also reiterated its opposition to 750 per-per-share bid from its two continental rivals.

The two raiders have agreed to split up the S&N''s operations among themselves with Carlsberg taking full control of Russia-based brewer Baltic Beverages Holdings (BBH), which it owns jointly with S&N. BBH controls over 85 per cent of Baltika, Russia''s biggest brewer. (See: Scottish & Newcastle rejects improved bid from Carlsberg and Heineken)

Moreover, S&N issued a combative response to the takeover bid; Its CEO John Dunsmore vowed to "take full control'''' of BBH along with a minority partner to pay for the deal without issuing shares.

He declared that there was no possibility of working with Carlsberg again. S&N has also launched arbitration proceedings aimed at forcing Carlsberg to give up its stake in BBH. S&N said that Carlsberg had breached the terms of the agreement for BBH by making the bid approach.

In its Q3 trading update, S&N said that it believed it had a "robust case" in the arbitration proceedings over BBH and was confident it would be in a position to take control of the business.