The brewing giant SABMiller has ruled itself out of making a rival bid for Scottish & Newcastle to trump an agreed £7.8bn offer from Carlsberg and Heineken.
Speculation that SABMiller was considering an £8bn – or 850p a share – bid for the Edinburgh-based brewer sent shares in S&N up 2.5 per cent yesterday. The Foster's and Newcastle Brown ale brewer finished the day higher than 800p – the price agreed by its continental European rivals last month as traders bought into the rumours. S&N shares rose 19.5 p to 807.5p after earlier rising to 811.5p on the bid talk, while SABMiller slipped 49p to 1082p.
But in a Stock Exchange statement delivered after the market closed, SABMiller said: "Consistent with its normal practice of evaluating all strategic opportunities, SABMiller confirms that, following the recent release of additional information on the underlying Scottish & Newcastle businesses, it undertook a preliminary evaluation of the group but decided not to take further action."
SABMiller has been named as a potential suitor of S&N for a number of years, although more recently it has made it clear it is not interested in western European markets and has called them "singularly unattractive".
The real prize for SABMiller would have been S&N's Russian business Baltic Beverages Holding (BBH), which it co-owns with Carlsberg. SABMiller has made no secret of its desire to expand in Russia, where it focuses on the premium beer market with brands such as Miller Genuine Draft and Zolotaya Bochka.
It was partly Carlsberg's desire to win full control of BBH that has led to the agreed carve-up of S&N, which will see Heineken cement its position as Europe's leading brewer by taking on S&N businesses in Portugal, Ireland, Finland and Belgium.
BBH is the largest beer company in Russia with 37.6 per cent of market share. The company yesterday reported a 19 per cent jump in sales volumes. Analysts believe that growth in the Russian beer market will slow to 5 to 7 per cent this year but BBH is expected to outperform the market two-fold.
Analysts had been sceptical about whether SABMiller could come in at such a late stage. Any attempt to bust up the agreed offer would certainly have been a legal minefield. Sam Hart, an analyst at Charles Stanley, said: "Everyone thought the price that Heineken and Carlsberg offered was pretty full."