Stand-off between S&N and Carlsberg/Heineken continues

By Hamish Champ

- Last updated on GMT

Related tags S&n Risk

The stand-off between Scottish & Newcastle (S&N) and the Carlsberg/Heineken consortium continued today, despite S&N agreeing...

The stand-off between Scottish & Newcastle (S&N) and the Carlsberg/Heineken consortium continued today, despite S&N agreeing provisionally to enter into talks with the pair.

Noting it believed its arbitration case regarding Baltic Beverage Holdings (BBH) was "strong", S&N has already rejected an improved offer from the consortium of 780p a share.

S&N labelled it "still provisional, still highly conditional and without the transparency we want regarding BBH". The group said it would talk on the basis of an 800p minimum offer and more transparency over BBH.

A source close to the situation said the consortium was "filibustering".

A spokesman for Carlsberg meanwhile called the 780p a share offer - which implies a value for BBH of £4.2bn - "a material increase".

Responding to S&N's call to engage based on a minimum 800p offer, he said it was a non-issue.

"The Takeover Panel [put up or shut up] deadline is now only a week or so away. Without a recommendation [from the S&N board to shareholders on the revised proposal] there will be no offer from the consortium, it will walk away and the offer will lapse," he added.

Analysts agreed that S&N's stance was a risky one.

In an investment note, Cazenove's Matthew Webb said: "We believe that the refusal of the S&N board to accept the Carlsberg/Heineken consortium's 780p indicative offer as a basis for discussions is unjustified and contrary to the interests of its shareholders.

"In our view it will be very difficult for the consortium to increase its offer further without risking destroying value for its own shareholders. We do not believe that the S&N board is deliberately acting against the interests of its own shareholders, but [we] do believe that it is having this effect by taking an excessively and dangerously hard line with the consortium.

"S&N seems to us to be taking an unjustified risk based on a highly uncertain alternative route, namely trying to acquire Carlsberg's 50 per cent stake in BBH though the courts."

Bruce Davidson of Blue Oar Securities said S&N was "walking a tightrope" in trying to get the offer up.

"By rejecting the offer it will face the wrath of many institutional investors who want to see S&N open discussions," he said.

S&N shares were up 6p at 725p.

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