Bid for S&N was derisory, says board

Scottish & Newcastle dismissed a £6.8bn takeover bid tabled by Carlsberg and Heineken as "unsolicited and derisory" yesterday

In a strongly worded rejection, Sir Brian Stewart, the chairman of the brewer of John Smith's and Newcastle Brown Ale, said the 720p per share offer that was put forward yesterday by the Danish and Dutch brewers was "an effort to get S&N's unique portfolio of businesses on the cheap". S&N's board also denied the bidders' request to gain limited access to its financial accounts or enter into discussions about what it terms a "highly conditional" offer.

The Edinburgh brewer has taken an aggressive stance to the approach since the bidders were forced by the Takeover Panel to make their intentions known last week. Several analysts have suggested a takeout price of 800p, which would value S&N at about £9.5bn.

The bidders argued yesterday that their offer implies a 36 per cent premium to S&N's undisturbed share price and 13.2 times last year's earnings. They also implied that if they withdrew their bid, the company's value would fall drastically, saying that it offers "value significantly in excess of the standalone independent value of S&N".

Under their plan, Carlsberg would form a new company to buy S&N. Carlsberg would pay 54 per cent of the offer price and take control of S&N's 50 per cent stake in Baltic Beverages, their Russian joint venture, as well as its operations in China, France and Greece. It has lined up a fin-ancing package from Lehman Brothers, BNP Paribas, Danske Bank and Nordea Bank. Heineken would pay the remaining 46 per cent from existing debt and a new facility arranged by Credit Suisse. It would take possession of S&N's UK, Irish, Portuguese, Finnish, Belgian, and American operations.

Under the proposed terms, the bid is contingent on board approval, access to limited due diligence and agreement with S&N's pension trustees over the contribution from Heineken.