S&N and Carlsberg renew bitter rivalry

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The Independent Online

Scottish & Newcastle and Carlsberg renewed their verbal mud-slinging yesterday as Baltic Beverages Holding, the jointly controlled Russian brewer at the centre of their bitter takeover battle, produced a set of frothy numbers that highlighted why both companies are so keen to win control of the group.

For the first nine months of the year, BBH generated earnings before expenses of ¿526m (£366m), up 33 per cent over the same period the year before. The brewer of Baltika beer also revised upward the growth forecasts for the Russian beer market for the rest of the year from 11 to 13 per cent to 13 to 15 per cent. BBH increased market share to 38 per cent in Russia, the world's third-largest beer market, to roughly twice its nearest competitor, SUN Interbrew.

The numbers, revealed on the same day that S&N and Carlsberg published their own interim figures, drew a line under why the business is so coveted by the companies that control it through a joint venture. S&N revealed a 2.1 per cent up-tick in profits before tax, while Carlsberg reported a 23 per cent profit increase.

The stakes are clear. Carlsberg partnered with Heineken to launch an unsolicited 720p-per-share bid for S&N last month, an offer that S&N dismissed as "derisory". The jewel of the business is BBH, estimated to be worth about £4bn alone. S&N finance director Ian McHoul intimated yesterday that Carlsberg was trying to talk down BBH's prospects as part of its effort to pay a bargain-basement price for S&N, which would give it full control of BBH.

"There is a clear conflict of interest about the information we give out about BBH and the information Carlsberg puts out, given the corporate situation that Carlsberg have put us in," he said. S&N began arbitration proceedings last week against Carlsberg, alleging that its takeover offer triggered a contract clause that would force it to sell BBH to them.

The Edinburgh brewer also implied that it would like to increase growth forecasts for BBH and reveal the outlook for 2008, but was being held back from doing so by the contractual agreement with Carlsberg. "We'd be very happy to waive that confidentiality. Carlsberg need to do the same," said John Dunsmore, the S&N chief executive.

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