Brewers' swoop

17 October 2007 By John Foley Follow @johnsfoley

Bagging the £9bn UK brewer won t be easy, nor will it be cheap. Bid speculation has long made S&N s share price frothy. While there is strategic sense in buying S&N, a deal doesn’t look financially attractive.

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Brewers Heineken and Carlsberg said they had formed a consortium that planned to make an offer for Scottish & Newcastle, their UK rival. They added that a deal was likely to be in cash, but said no formal approach had been made. S&N was worth around £9.1bn including net debt, based on Wednesday afternoon's share price of around 760p.

Under the terms of the planned deal, Carlsberg would take over S&N's French business, which includes the Kronenbourg lager brand. It would also take over S&N's half of their joint venture in Russia and Eastern Europe, BBH. Heineken would take over S&N's UK operations, which include Foster's lager and Strongbow cider.

Shares in S&N have risen around 20% since the end of March, when it was reported that Carlsberg was planning to relax its restrictions on issuing new equity, leading to speculation of a deal. S&N said it had received no approach as of Wednesday afternoon, and described the breakup bid as "unsolicited and unwelcome".

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