Technical service organisations are essential bodies that help brewers to supply their pub customers with technical advice and services. Both parties claim that the venture is the best way to secure significant benefits for all customers. These would include enhanced service and quicker response times.
The joint venture would allow the two companies to eradicate duplicated activity and reduce administrative costs for both companies.
Serviced Dispense Equipment (SDEL), the name of the new technical company, would own all the dispence assets of bot companies, worth a combined £115 m (€ 226m).
A second company, Innserve would manage servicing and installation of equipment in all UK pubs served by the two brewers.
Scottish and Newcastle (S&N), Britain's largest brewer, and the parent company of Scottish Courage, has said that it expects to save over €7 m over the deal. This is part of the £40-50 million annual savings target it anticipates by cutting its €262 distribution costs by a quarter.
S&T and Carlsberg already co-own Baltic Bevrage holding in Russia. This new venture will strengthen the companies relationship further.
The proposal will be submitted to the Office of Fair Trading (OFT) for regulatory approval. A decision is expected in four weeks and if all goes ahead, the new service company is expected to be fully operational by autumn 2004.