S&N in raid for £1.2bn Finnish brewer
Britain's biggest brewer Scottish & Newcastle has made its first big move into Russia, Europe's second largest beer market.
The £1.2bn deal for Finnish-based rival Hartwall includes a 50 per cent stake in BBH, a joint venture with Carlsberg in Russia.
The Hartwall takeover will see S&N take control of one of Finland's leading beer and soft drinks company. Founded in 1836, the company has a 45 per cent share of the Finnish market. Brands include Lapin Kulta beer.
BBH brews Baltika, the biggest selling beer in Russia and the Baltic - the joint venture with Carlsberg Breweries also operates in Estonia, Latvia, Lithuania and the Ukraine.
S&N issued 209m shares to finance 60 per cent of the deal. The remainder is being financed by debt, taking it up to about £3bn. It is believed this will increase the pressure on the S&N board to sell its 1,450-strong pub estate.
Analysts at WestLB were upbeat and immediately upgraded the stock. The German bank said: "Finally, S&N has bought something with a growth engine."
But the City was largely unimpressed - the shares fell 41p to 538p. The deal also affected South African Breweries. City bankers had expected S&N's next corporate move to be a merger with SAB.
The group has been repeatedly linked in a three-way deal with US brewer Miller and SAB, a merger that would create one of the biggest brewer's in the world.
Scottish & Newcastle chairman Brian Stewart (pictured)said the Hartwall deal is part of an ongoing strategy to become an international brewer.
He said: "The strong growth position of BBH to Scottish & Newcastle's western European platform, enhanced by the Finnish market position of Hartwall, means we are establishing a leading business across the whole of Europe from Siberia to the Atlantic."
Erik Hartwall, managing director of the Hartwall family holding company, and BBH chairman Henrik Therman will both join the board of Scottish & Newcastle if the deal goes through.
Edinburgh-based Scottish & Newcastle owns range of high-volume brands, such as Foster's, Kronenbourg 1664, John Smith's and Newcastle Brown Ale.
