Carlsberg stands by S&N offer

By Neil Merrett

- Last updated on GMT

Related tags Carlsberg Carlsberg group

Carlsberg and Heineken will stand by a rejected joint-offer made
last month for British-based rival Scottish and Newcastle
(S&N), despite recent research suggesting that an improved bid
would likely be accepted by shareholders.

Carlsberg spokesperson Jens Peter Skaarup​ told that the 750 pence per share offer it made for S&N, with which it jointly owns the Baltic Beverages Holding (BBH) joint venture, remained a fair price for the brewers operations. The companies unwillingness to budge could lead to more of uncertainty for the future of some of the UK and Europe's largest beer and lager brands, which include Kronenbourg, Fosters, John Smith's and Baltika. Carlsberg did not rule out a further bid for the operations at a later date though, suggesting that both itself and Heineken were continuing in their attempts to open negotiations with S&N over the deal. S&N's board has continually stated that attempts by Carlsberg to buy its operations are unwelcome, and that the company is now conversely hoping to acquire its partner's stake in BBH. Carlsberg's dismissal of a higher offer follows a recent survey by Execution Research, revealing that about a quarter of S&N's shareholders would encourage an increased bid from the consortium. 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, the analyst said. Just last month, S&N's board rejected the 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 its 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. 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. 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.

Related topics Manufacturers Carlsberg

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