Diageo plan to split Scottish & Newcastle

By Chris Mercer

- Last updated on GMT

Related tags Sab Alcoholic beverage

Diageo approached SABMiller to discuss carving up fellow alcoholic
drinks giant, Scottish & Newcastle, adding to speculation over
industry consolidation.

Diageo, the world's largest alcoholic drinks group and owner of Guinness, is understood to have made the first move, said a source connected to discussions.

SABMiller, however, did not consider the idea to be at a very advanced stage, BeverageDaily.com understands.

Rumours over a possible buyout of Scottish & Newcastle, which owns Foster's and John Smiths beer in the UK and Kronenbourg in France, have been circling for several weeks.

News of discussions between SABMiller and Diageo regarding a carve-up deal for S&N were revealed in a report by the Financial Times newspaper on Monday.

"Detailed discussions", it said, led to an arrangement that would see SAB make an offer for S&N but agree to sell the group's UK beer business to Diageo.

SAB would then pocket S&N's 50 per cent stake in the group's Eastern Europe joint venture with Carlsberg, Baltic Beverages Holding.

The venture accounts for around a third of beer sales on the emerging Russian beer market.

Speculation that SAB could make an offer for S&N has been swirling for a few weeks, boosting S&N's share price, but several analysts put the rumours down to empty chatter.

Malcolm Wyman, SAB's chief financial officer, said earlier this month that the western European beer market remained unattractive.

SAB's global lager volumes rose 23 per cent for the year up to 31 March thanks to fourth quarter surge in several emerging markets across Asia and South America, the brewer said in a recent trading update.

Related topics Manufacturers Diageo

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