S&N to become biggest brewer as Courage bid gets green light

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The Independent Online

Scottish & Newcastle's bid to become Britain's largest brewer was given the green light yesterday when the Government said it would accept its pounds 425m bid for Courage with the existing conditions, rather than refer the deal to the Monopolies and Mergers Commission.

The DTI's announcement ends S&N's bitter battle with rival beer groups such as Whitbread, which have tried to block the deal and force an MMC referral on the grounds that it is uncompetitive.

Competition and Consumer Affairs minister Jonathan Evans quashed such hopes yesterday when he said that, following S&N's agreement to abide to the bid conditions, he was "minded to accept the undertakings in lieu of a reference to the MMC".

He added that before he made his final decision he would allow other brewers to comment "on the text of the undertakings, but not on the substance". Rivals have until 10 August to make their final representations but yesterday's announcement means that the deal has as good as cleared its final hurdle.

Scottish & Newcastle reacted with cautious optimism, saying: "We are pleased that after a further consultation period no new or supplementary undertakings have been recommended. Obviously we are keen to end the uncertainty but must wait patiently for the final outcome." Whitbread declined to comment.

S&N had feared that more onerous conditions might be attached to the bid and the DTI's decision will be seen in the industry as letting the company off lightly.

Earlier representations to the DTI suggested S&N should be required to divest breweries or brands.

But the director of Fair Trading said this idea had little merit as it would require brands to be re-branded to reflect a change of ownership.

Under the terms of the deal, Scottish & Newcastle will have to cut its tied estate by 115 pubs and pledge to release half of the 1,000-strong Inntrepreneur estate from their supply agreements.

With Courage brewing in its portfolio, Scottish & Newcastle will control 25 per cent of the UK beer market, taking it ahead of Bass with 22 per cent.

Arguments over the deal continued right up to the last minute with Foster's, the Australian group that controls Courage, saying that it turned down a higher bid from Whitbread.

It cited a personality clash with Whitbread management as one reason for snubbing Sir Michael Angus's group. The waspish comments were seen as retaliation against repeated complaints by Whitbread about the S&N deal.

Scottish & Newcastle's share finished 1p higher at 608p.