Scottish & Newcastle was again the centre of takeover speculation yesterday after rival brewer SAB Miller was named as a possible suitor.
The Edinburgh-based brewer, best known for brewing Foster's, Kronenbourg 1664 and John Smith's and which still employs 160 of its 4,500 UK staff in the North-East, has been the subject of takeover rumours for several weeks.
But a newspaper report over the weekend said SAB Miller, which makes Miller Genuine Draft, Peroni Nastro Azzurro and Pilsner Urquell, was weighing up a £6.5bn bid for one of the world's largest brewing companies.
The newspaper reported that, if it succeeded in acquiring the rival company, SAB Miller planned to sell Scottish & Newcastle's British interests - including the country's highest-selling lager Foster's - and the firm's French business interests to spirits giant Diageo.
SAB Miller, which is listed on the London and Johannesburg stock exchanges, may - if it decides to push ahead with a bid - make an offer for Scottish & Newcastle within the next few days.
The company's share price, which was up half a penny, or 0.08%, at yesterday's close to 606.5p, has surged ahead in recent days, one of a number to do so without explanation and prompting a probe by the Financial Services Authority.
The watchdog will determine whether Scottish & Newcastle, which has seen its share price surge from 546p on March 28, had been talking to a potential suitor without notifying investors. The SAB Miller bid would value Scottish & Newcastle's shares at 712p.
A dealer at a leading bank said over the weekend: "I think there are issues that need investigating.
"Share price rises present an opportunity for people to make big money, which is fine as long as no one is spreading stories designed to create a false market. That would be something for the authorities to stamp on."
Scottish & Newcastle, which said in February pre-tax profits had risen 13.9% to £452m last year, following a 7% rise in turnover to £4.15bn, threw its remaining operations in the North-East after it said it was looking to cut costs by £50m.
The company's presence in the North-East has reduced markedly in recent years following the closure of the company's bottling plant at the Federation Brewery in Gateshead earlier this year.
SAB Miller last year posted profits of $15m on the back of $2.4bn turnover. It is expected to report strong beer sales when it issues its fourth-quarter trading statement on Thursday, with analysts looking for organic volume growth of more than 10%. Sales have been healthy in Asia, Latin America and eastern Europe, but weaker in the US and South Africa.