Posts Tagged ‘Scottish & Newcastle’

 From the Morning Advertiser:

Scottish & Newcastle (S&N) has rejected a revised bid of 780p a share from Carlsberg and Heineken.

Newcastle Brown Ale sixpackBut S&N said it would be willing to talk if a bid of 800p a share was made by the Consortium.

The revised offer values the British brewer at £7.6bn.

S&N said that it had considered the improved proposal carefully but felt that it still failed to reflect the “unique strengths and markets positions” of the group, and failed to be “competitive with the alternatives the company can pursue for delivering value to its shareholders”.

Jean-François van Boxmeer, chairman of the executive board of Heineken said: “It is decision time for S&N shareholders. Without the S&N Board’s co-operation there will no offer by the Consortium.

“Our increased 780p proposal is the only deliverable opportunity today for shareholders to realise a material premium to the independent value of S&N.”

Jørgen Buhl Rasmussen, president and chief executive of Carlsberg, said: “The Consortium’s increased proposal represents a very generous proposition to S&N shareholders by any measure.

Seems to me they are getting closer to an agreement. This would mean the most for Carlsberg, with the Russian market being the only part of Europe where there is any growth to speak of. I think there are limits to what Heineken will pay for a share of the falling British market.

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The Danish business weekly Berlingske Nyhedsmagasin has an analysis on why the attempted takeover of Scottish & Newcastle is necessary for Carlsberg:

Carlsberg has not been active in the game of consolidation that has been going on for decades among the global breweries.

But that is a thing of the past. Carlsberg has, together with Heineken, entered a hostile bid for their partner Scottish & Newcastle to take over the Russian golden egg  Baltic Beverages Holding, BBH.

The Russian beer market grew by six per cent in 2005, ten per cent in 2006 og 17 per cent during the first nine months of 2007. BBH has not only followed this growth, but it has expanded its share of the market. At the same time earnings are up from  20 % in 2005 to 24 5 this year. This is something completely different from the low margins on the largely contracting European markets where both Carlsberg and S&N mainly operate.

This is what has led to Carlsberg and Heineken bidding for S&N – assisted by rumours about the giant SAB Miller being interested in S&N. And this is what can explain the current bid on the level of their earnings over the next 14 years.

BBH is central for both Carlsberg and S&N. For both it is the Russian activity that gives growth. If you remove BBH from the accounts,  the turnover of both Carlsberg and S&N is stagnating. 

For Carlsberg the Russian brewery represents a quarter of the company’s total turnover – but when it comes to earnings, it represents 40 per cent.

If the gamble pays off, leaving Carlsberg as the sole owner of BBH, the growth comet will contribute almost 40 % of Carlsberg’s total turnover and almost 60% of its earnings.

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European beer giants Heineken and Carlsberg are discussing to join forces to take over Scottish & Newcastle. This does not mean a merger between the Danes and the Dutch, however, they intend to split the spoils:

A statement from Carlsberg said: “An offer, if made, is likely to be in cash. It is currently intended that Carlsberg will ultimately acquire Scottish & Newcastle’s interest in Baltic Beverage Holdings, France and Greece and that Heineken will ultimately assume control of Scottish & Newcastle’s business in the UK and other European markets.”

This will give Carlsberg full control over BBH, which has a forty per cent market share in the rapidly expanding Russian market. Carlsberg has much better profits in Russia than in Western Europe for the time being.

Sources: Morning Advertiser, Politiken

Update: Scottish & Newcastle follows the British principle of keeping a stiff upper lip in times of attack:

The proposed break-up bid from Heineken and Carlsberg, the company’s joint
venture partner in BBH, is unsolicited and unwelcome.

S&N is confident in its future as an independent group with a combination of
strong growth in emerging markets and cash generation in developed markets.

S&N strongly urges shareholders to take no action at this time. A further
announcement will be made if appropriate.

Seeing the beer range they choose to promote on their web site, I would not want to buy their beers, let alone their breweries. Kronenbourg 1664, Fosters, Baltika, Grimbergen (OK, maybe a bottle..) and Newcastle Brown Ale. Nothing very Scottish about that list!

But I love their wording.  A further announcement will be made if appropriate.

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