S&N strikes back in Carlsberg joint venture battle

Scottish & Newcastle (S&N) has gone on the counter attack against a joint takeover bid being brewed up by Carlsberg and Heineken. In the lastest move S&N claims that Carlsberg has broken the terms of an agreement the two companies made when forming their joint venture, Baltic Beverages Holding (BBH). The claims could leave one of the fastest growing Easter European brewers up for grabs, highlighting the possible difficulties in operating a company with an industry rival. S&N alleges that under the terms any party in breach of the agreement is then inclined to offer its shares in the venture to the respective partner. The UK-based company claims the agreement over BBH was broken last week when Carlsberg indicated it was in talks with Heineken to take over S&N. S&N said yesterday that it was now considering whether it was in the group's best interests to attempt to either obtain full ownership of BBH, or find a new partner for the operations, following consultation with its legal and financial advisors. In a statement Carlsberg has curtly responded to S&N's claims by claiming they had "no merit". ​Carlsberg and S&N have been partners in BBH since 2002, driving the company to become one of the major players in the burgeoning beer markets of countries like Russia. The company said it had hoped to continue this cooperation with Carlsberg in the long-term, though had been forced to ensure it was protecting its own operations following the alleged breach. S&N's fight back follows Carlsberg and Heineken's announcement last week that they had entered into discussions over forming a consortium to purchase the brewer. In a joint statement, the potential buyers said that should a deal go ahead, they would look to split the group's regional operations between themselves. Through this plan, Heineken would therefore control S&N's Western European operations, including the UK market, while Carlsberg would claim full ownership of the Baltic Beverages Holding (BBH) division, which operates in Eastern Europe. During the first quarter of the year, BBH posted a 37.1 per cent increase in net sales to €1.3bn during the first half of the current fiscal year, resulting from its continued expansion into the region. Outside of BBH, S&N distributes and manufactures a number of leading beer and cider brands including Foster's, Kronenbourg 1664, Strongbow and John Smith's.