S&N to seek alternative BBH partner
Scottish & Newcastle (S&N) is prepared to find another partner to support its bid to wrest away from Carlsberg the half of Baltic Beverage Holdings (BBH) it does not already own.
In its battle with Carlsberg/Heineken, who have jointly launched a 750p-a-share indicative offer for the group, S&N has outlined a raft of proposals to convince shareholders they are better off holding onto their investment in an independent S&N, including a new production and packaging deal with Coors UK and the sale of its French wholesale business.
In a statement issued today, S&N described the "highly conditional proposal" from Carlsberg/Heineken "wholly inadequate, as it substantially undervalues the unique strengths and market positions of S&N.
"S&N estimates that the consortium's latest indicative proposal value of 750p per share reflects an equity value for S&N's share of Baltic Beverage Holdings (BBH) of only around £3.2bn.
"This does not recognise the value of BBH, and the S&N board strongly believes that shareholders need further information to be able to make an informed assessment.
"With respect to the arbitration proceedings in relation to BBH, S&N believes it has a robust case. We are confident our claims will be upheld by the Arbitral Tribunal and that it will be in a position to take control of BBH.
"S&N is prepared to introduce a minority partner to support its full ownership of BBH," it concluded.
S&N also announced it is to form a production and packaging venture with Coors UK as part of its defence against bid overtures from Carlsberg/Heineken.
The initiative was revealed as S&N confirmed it is to sell its French wholesale business to C-10, the largest independent wholesaler in France, for £86m.
The Coors deal will be a long-term arrangement which will see up to 3 million hectolitres of on trade volume being produced under contract by the US-owned brewer.
S&N said it was consulting staff affected by the new set up, "but envisage significant cost savings and reduced capital commitment linked to this arrangement".
Savings of £20m are forecast, plus reduced capital commitments.
Other moves announced today include a joint venture with Q-Group to create the a new cider mill in Herefordshire capable of producing 25 per cent more cider than S&N's current output, with a contract lasting 10 years, and the closure of S&N's bottling plant at its Berkshire brewery. S&N said it plans to move remaining volumes to its Tadcaster bottling facility.
It also announced the creation of a venture Heritage Drinks Limited (HDL), "specifically to support its heritage ale brands and second tier cider brands. This will ensure that these brands get the appropriate level of focus, brand management and marketing support to ensure they continue to offer a real choice in S&N's portfolio".
Details of the brands affected and S&N's partner in the venture were not included in the statement.
On its recent trading, S&N said it "has continued to make good progress in most of our core beer markets and brands, and we have extended our clear leadership position in the dynamic cider market, despite a background of poor summer weather. BBH has continued to outperform, with strong performance in Russia and excellent growth in a number of its other markets.
"There has continued to be underlying market weakness in many of our core Western European markets, and trading conditions in France have remained challenging, both in the on and off-trade. However, these factors are either not expected to recur in 2008 or have now been resolved."
