S&N rejects 'wholly inadequate' £7.3bn bid

Scottish & Newcastle has rejected a sweetened £7.3bn offer from Carlsberg and Heineken.

The brewer poured scorn on the new 750p per share offer yesterday, pointing out that it represents just a 4 per cent increase on the initial 720p bid made by the Danish and Dutch brewers last month. In a statement to the Stock Exchange, the company said it had "no hesitation rejecting this wholly inadequate proposal", and reiterated its refusal to begin talks with its suitors.

Carlsberg and Heineken published details of their improved offer yesterday so that shareholders could be "fully informed of [its] merits" after having been repeatedly dismissed by S&N. Heineken's chairman, Jean-François van Boxmeer, said the offer "represents a very attractive opportunity for S&N shareholders to obtain a price which is materially higher than the standalone value of the group". The consortium also argued that the offer represented 13.6 times S&N's 2006 earnings before expense – higher than the multiples the Edinburgh brewer paid on several past acquisitions, including Hartwall of Finland. Analysts have mooted 800p as a level at which S&N would be forced to seriously consider.

A key point of conflict for the two sides is the level of disclosure about the performance and future prospects of Baltic Beverage Holdings, the prized Russian brewing venture controlled jointly by S&N and Carlsberg. S&N has made the release of further information on BBH a central plank of its campaign against the offer. It has called for the publication of the unit's financial forecasts for 2008, assuming that the projection, expected to be very bullish, would expose Carlsberg's "lowball" offer, according to sources close to the situation. BBH last week reported a 33 per cent increase in earnings before expense to ¿526m (£376m) for the first nine months of the year, far outstripping the performance of either of its owners. Financial forecasts can only be revealed if both companies consent.

"The consortium's proposal significantly undervalues S&N's brands and market positions," said S&N chief executive, John Dunsmore. "We particularly object to Carlsberg's refusal to allow agreed information about BBH's prospects to be released." Carslberg said yesterday it would release the information only as part of a consolidated profit forecast for all of S&N.