S&N in bid talks as brewers raise offer

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The Independent Online

After three months spent resisting a break-up offer from Carlsberg and Hein-eken, Scottish & Newcastle has finally agreed to takeover talks with its suitors as they agreed to increase their bid price, for the third time, to 800p per share.

In an announcement to the stock market, the brewer of John Smith's and Newcastle Brown Ale said that it had begun "discussions in relation to a possible recommended offer" and asked for an extension of the "put-up or shut-up" deadline that is set to expire at noon on Monday until 24 January.

A deal at 800p would be seen as a triumph for the S&N chairman Sir Brian Stewart, who has resisted several lower offers from the Danish and Dutch bidders. They began with an unsolicited offer of 720p per share in late October. The latest proposal is conditioned on limited due diligence, though, assuming it goes through, most invest-ors are expected to accept it. Several analysts had mooted the 800p as an appropriate price when the process first began.

The talks are likely to revolve around a few key points. S&N will seek assurance that the dividend, expected to be about 15p, will be paid out to shareholders.

It is understood that the brewer will also continue with the arbitration proceedings it has begun against Carlsberg in Sweden, where it is arguing that Carlsberg had breached a shareholder agreement governing their joint ownership of BBH and should be forced to sell it its stake in the Russian brewer at the heart of the takeover battle, until any deal is closed.

The Edinburgh brewer is also expected to push for Carlsberg to release earnings and growth expectations of BBH – information it has until now declined to reveal – to allow shareholders to make a more informed vote.

Under the deal, Heineken would become the UK's biggest brewer by taking control of the operations here, as well as S&N's businesses in western Europe and America. It will be the number two in Portugal, Belgium and Finland.

Carlsberg would take full control of BBH, as well as the businesses in China, France and Greece. Having already agreed to pay 54 per cent of the headline price before the price began creeping up, it is on the hook for nearly all of the improved offer price. Of the 50p increase from 750p to 800p, Carlsberg has pledged to pay 45p of it. Its shares hit a 52-week low on the news.