S&N turn down bid for takeover
Jan 11 2008 by Iain Laing, The Journal
SCOTTISH & Newcastle has continued to frustrate Carlsberg and Heineken after the UK firm rejected another takeover approach from the brewing giants.
The pair’s latest proposal valued S&N at £7.6bn, but the Kronenbourg 1664 and Foster’s maker indicated that an offer worth at least £7.8bn was needed before it would consider engaging with its continental rivals.
S&N said the latest approach at 780p a share failed to reflect the “strengths and market positions” of the company. The Carlsberg consortium has made two other indicative offers, with the first coming in October.
Carlsberg president Jorgen Buhl Rasmussen said it was now up to shareholders to lobby the S&N board if they wanted the deal to go through.
He said: “The consortium’s increased proposal represents a very generous proposition to S&N shareholders by any measure.”
Danish firm Carlsberg and Dutch brewer Heineken plan to carve up S&N if they succeed in their overtures for the business. Their approach is conditional on a board recommendation and extensive due diligence. Carlsberg wants to take S&N’s stake in their 50/50 Russian joint venture BBH, as well as the firm’s operations in France and Greece. Heineken is looking to gain S&N’s UK business and operations elsewhere in Europe. The fast-growing BBH is seen as the jewel in the crown of S&N’s business.
The company shut its massive Tyne Brewery three years ago, but it still has around 80 staff making Newcastle Brown Ale at the Federation Brewery in Gateshead. S&N, which also makes John Smith’s, has around 3,300 UK staff.
The consortium is facing a Takeover Panel deadline of January 21 to table a formal offer or walk away.
S&N said it had considered the latest proposal carefully but that it still failed to reflect the company’s strengths and be “competitive with the alternatives the company can pursue for delivering value to its shareholders”.
It added in a statement: “The board has discussed with the consortium that it is prepared to engage with them, but only when a firm proposal of at least 800p per share had been made and when Carlsberg has agreed to the publication of proper information about BBH prospects.”
Chief executive John Dunsmore has previously accused Carlsberg of denying its shareholders the opportunity to assess the true worth of the BBH operation, which is a 50-50 joint venture involving Carlsberg and S&N.
Analysts said S&N’s reaction would lead to shareholder pressure for it to engage in talks with the consortium, and Carlsberg said S&N shareholders will find the bid attractive.
Carlsberg CEO Jorgen Buhl Rasmussen said: “We have had a dialogue with S&N shareholders during the entire process, also in connection with the raised bid. As I experience it, they believe that this bid is attractive. I expect an intensified dialogue between S&N shareholders and the management and board.”
Analyst Matthew Webb at Cazenove said it would be very difficult for the consortium to increase its offer without destroying value for its shareholders, especially as Carlsberg will be paying 83% of the extra 30p in the raised bid.
