Foster's turned down offer by Whitbread

Foster's, the Australian brewing group selling its Courage division to Scottish & Newcastle,turned down a significantly higher offer for the group from Whitbread.

Yesterday's admission comes as the DTI was expected to wave through Scottish & Newcastle's pounds 425m offer in the next few days with minor conditions.

One of Foster's reasons for refusing the Whitbread offer is certain to raise eyebrows. It appears that a personality conflict between Foster's and Whitbread management made negotiations difficult.

One brewing analyst felt that the announcement of the snub was little more than sour grapes as Whitbread has been vociferous in trying to block the deal, consistently requesting that the bid be referred to the Monopolies and Mergers Commission. Sir Michael Angus repeated the claims at Whitbread's annual meeting last month.

One analyst said: "It just sounds as though Foster's is getting its own back." Whitbread declined to comment.

Investors yesterday expressed concerns that further conditions may be attached to Scottish & Newcastle's bid before the deal wins DTI approval.

The DTI has already asked S&N for assurances that it will cut its tied estate by 115 pubs and a pledge to release half of the Inntrepreneur estate from their supply agreements.

Under the current terms, Inntrepreneur pubs must buy beer from Courage until March 1998. The revised timetable is that 500 pubs should be released by January, with the rest to follow a year later.

A further condition is that S&N must not increase the size of its tied- pub estate without agreement from the Office of Fair Trading. Rivals such as Whitbread have argued that S&N has got off lightly with the conditions. S&N shares fell 3p to 607p yesterday on fears that more may be added.

Whitbread says it pulled out of talks because it feared the conditions attached to its bid would be too onerous. Foster's says Whitbread only pulled out when Foster's told it to.

The Courage deal will enable S&N to become Britain's larg-est brewer, ahead of Bass with 22 per cent. After failing to buy Scottish & Newcastle, Harvester and Chef and Brewer, Whitbread is known to be keen to flex its muscles. This week, it has emerged as a favourite to bid for David Lloyd Leisure, the tennis club group run by the former Davis Cup player.

Market Report, page 21

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