Light on fizz

20 November 2007 By John Foley Follow @johnsfoley

In arguing why rivals Carlsberg and Heineken are underbidding, the UK brewer has shown that things aren’t great in its core European markets. The bidders may still need to pay more than 750p a share but the bar has probably come down.

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Scottish & Newcastle, the UK brewer, released a trading statement in which it reiterated its opposition to a 750pashare bid from rivals Carlsberg and Heineken. S&N said the proposal, which values it at around £9.5bn including net debt and debt from joint ventures, didn't reflect the value of BBH, its Russian joint venture with Carlsberg.
S&N said that trading in much of continental Europe remained challenging. French retail sales fell 9.2% in the third quarter, while sales in Belgium fell 7.4%, slightly less than the market overall. Western European beer markets are in decline in volume terms, though tend to be more profitable than developing markets.

As part of its defence against Carlsberg and Heineken's bid, S&N said it would sell a large part of its French distribution business, which is lossmaking. It also announced two joint ventures in the UK intended to take out excess manufacturing capacity, one of them with US brewer Coors.

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