Revised Carlsberg offer may sway S&N shareholders - survey

More than half of a surveyed group, who account for about 10 to 20 per cent of S&N's share value, said they would consider an increased offer, with overwhelming support for an 800 pence per share deal, says analyst Execution Research. The new findings appear to reflect a growing divide about the hostile takeover bid between the S&N board's stance and shareholders. "S&N's management is walking a fine line between obtaining the best price possible and losing support of its shareholders,"​ the analyst stated. In related news the S&N board is continuing to fight to retain control of operations by announcing yesterday that it was moving ahead with arbitration action against Carlsberg over Baltic Beverage Holdings (BBH), a joint venture held equally by both companies. Just last month, S&N's board rejected a sweetened 750 pence per share takeover offer from Carlsberg and Heineken, indicating that the company's executives were in no mood to relinquish control. S&N's shareholders appear less resilient though, according to Execution Research. Out of the 34 respondents to its latest survey survey, 16 of whom are S&N shareholders, 25 people said they expected the Heineken-Carlsberg consortium to succeed with their takeover plan. Mirroring this concern, the analyst added that most respondents believe that the two parties should already be discussing a possible deal, with little concern on whether the acquisition was hostile or not. Of the 16 company shareholders interviewed, five hold between a one per cent to three per cent holding in S&N, Execution said. Whether the deal goes ahead or not, 20 respondents believe that the current 50/50 structure of S&N and Carlsberg's Baltic Beverage Holdings (BBH) joint-venture, seen as the jewel in the crown by many analysts, is unsustainable. Seven out of the 16 company stakeholders said therefore that they believed that a fifteen fold increase of S&N's full year operating profit for 2007, accounting to about 800 pence per share was a sufficient offer for the company. Conversely, only four of this group were likely to support a bid by S&N to purchase Carlsberg's 50 per cent holding in BBH at the respective "fair" value, according to the survey. Execution Research concluded from the survey that a relatively modest increase in the offer price from Heineken and Carlsberg would significantly increase the pressure on the brewer's board to accept an offer. However, the survey was not all bad reading for S&N. About 60 per cent of respondents said they believed that S&N were justified in taking Carlsberg to the Arbitration Institute of the Stockholm Chamber of Commerce for allegedly breaking their agreement over BBH. S&N claim that Carlsberg's takeover bid has broken the terms of their BBH agreement, which would therefore require the Denmark-based brewer to sell up its take in the venture to them. The arbitration support will come as some boost to S&N, which said yesterday that a chairman had been appointed to oversee the Arbitral Tribunal at the Chamber of Commerce. According to S&N, the tribunal could lead to the brewer taking full control of BBH if the decision, expected within six months, goes their way. Carlsberg and Heineken first announced in October that they had formed a consortium to purchase S&N. 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 control S&N's Western European operations, including the UK market, while Carlsberg would claim full ownership of the BBH. 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.