S&N exudes Courage on deal for brewer

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The Independent Online
Scottish & Newcastle, the Edinburgh-based brewer, was yesterday confident that its pounds 425m takeover of the southern-based Courage would be waved through by Michael Heseltine, President of the Board of Trade.

The findings of an Office of Fair Trading investigation into the bid were passed to Mr Heseltine last week and a decision on whether or not to refer it to the Monopolies and Mergers Commission is expected in the next few days.

Brian Stewart, chief executive, said he was confident of the logic of the deal. It was unlikely to affect the group's position with supermarkets, who are already strong, he claimed, and it would give more choice to customers in the "on trade" - pubs and the like - "and that's going to be good news from a competitive point of view".

The deal will mean S&N adding brands like Holsten Pils and Kronenbourg to existing names like Becks, but Mr Stewart said he did not see the need for any rationalisation, either from a commercial or a regulatory point of view.

People increasingly want a choice of beers at the bar, he suggested. "People will have to sell a portfolio of products. That's what the customer wants."

S&N is arguing that with the addition of Courage its market share only rises to 25 per cent - the usual trigger point for a monopolies investigation - whereas rivals are claiming it would be nearer 31 per cent. Mr Stewart said if the argument went against it, S&N would continue to develop the beer business. "We are not going to become completely myopic about it."

He was speaking as S&N unveiled a 19 per cent rise in pre-tax profits for the year to April, well ahead of the pounds 262m forecast made at the time the acquisition was announced in May. Fully diluted earnings per share advanced 11 per cent to 36.7p and the dividend goes up 7 per cent to 18.23p, after a final of 12.05p.

The main boost to the results came from the first full year of Chef & Brewer, the pub chain acquired for pounds 700m from Grand Metropolitan in November 1993.

Profits from the catering division leapt from pounds 88.7m to pounds 143m on sales 39 per cent ahead at pounds 723m.