S&N holds talks with private equity players
Jan 14 2008 Sarah Judd, Evening Gazette
BREWER Scottish & Newcastle has held talks with a number of private equity and trade buyers in a bid to seize control of its Russian joint venture with Carlsberg, according to reports.
The maker of Foster's and Newcastle Brown, which is facing a £7.6bn takeover bid from Carlsberg and Heineken, has contacted private equity firms, as well as at least one rival brewer, to discuss a potential bid for full control of Baltic Beverages Holdings (BBH). S&N owns 50% of BBH and Carlsberg owns the other half.
Texas Pacific Group, the US private equity firm, was contacted before Christmas. Blackstone and Anheuser-Busch, the US brewer of Budweiser, are also understood to have been sounded out.
Meanwhile, a Tees Valley stockbroker says Carlsberg-Heineken will need to up its bid for brewing giant Scottish and Newcastle to as much as 800p-per-share to bring it to the negotiating table.
S&N, which has a depot in Darlington, has rejected a 780p-per-share bid from its rivals, days after reports that the company was under pressure from shareholders to look more favourably on even a slight improvement in the consortium’s initial offer of 750p-a-share.
The decision to reject the bid, which valued S&N at £7.6bn, came as it presses ahead with attempts to gain full control of Baltic Beverage Holdings (BBH), a 50/50 Russian venture it has with Carlsberg.
S&N has submitted claims against Carlsberg to the arbitral tribunal in Stockholm for what it claims to be “breaches of the BBH shareholders agreement” and “Carlsberg’s misuse of confidential information” on the venture.
The brewer is confident its claim will be successful and it will have the right to acquire Carlsberg’s 50% in BBH at fair market value, which could net it synergies of £100m a year.
Tees Valley stockbroker Anthony Platts, divisional director of Thornaby-based Wise Speke, described BBH as the “prize that each party wants,” with the latest offer from the Carlsberg-Heineken consortium giving BBH an implied value of £4.2bn.
Mr Platts said: “Any improved bid from Carlsberg-Heineken would need to have been significantly higher than the initial 750p offering, and S&N’s view of significant would have been more than 30p higher.
“The share price is only up 5.5p, as the improved offer has not really changed the scenario. Time is running out as Carlsberg-Heineken now needs to make a formal offer by January 21, so it may be the case that they have to put an even higher formal bid on the table, possibly as much as 800p to get S&N into discussions. At that level, shareholders may put pressure on the company to explore that possibility.”
S&N maintained the latest approach failed to reflect the “strengths and market positions” of the company. A decision on S&N’s attempts to gain control of BBH through the arbitration procedure is due by July 3.
