S&N rejects improved £7.3bn takeover bid

by Joe Gill, Brand Republic 16-Nov-07, 09:25

LONDON - Scottish & Newcastle has rejected an improved offer of £7.3bn from Carlsberg and Heineken, saying the 4% increase on last month's offer was 'wholly inadequate'.

S&N's board says the offer failed to take full account of the value of its stake in the Russian brewing group Baltic Beverage Holding, its joint venture with Carlsberg.

The consortium published its offer yesterday and has appealed to S&N shareholders to put pressure on the brewer’s management to engage in talks.

It called S&N's rejection of the offer "hasty" and "ill-informed", saying that it was very disappointed with S&N's response.

Jorgen Buhl Rasmussen, chief executive of Carlsberg, said: "We find the board’s intransigence and ill-informed rejection very disappointing. The time has come for S&N shareholders to direct the board to engage with us."

S&N has demanded the publication of BBH's financial forecasts for 2008, following last week's reported earnings growth of 33% before expenses to €526m (£376m). Carlsberg has so far refused to release the information on BBH.

In an escalating war of words, S&N chief executive John Dunsmore said the new proposal "significantly undervalues S&N's brands and market positions".

He said the group "particularly objected to Carlsberg's refusal to allow information about BBH's prospects to be released".

S&N chairman Sir Brian Stewart claimed that Carlsberg and Heineken were attempting to get S&N's portfolio of businesses "on the cheap".

Last month, the consortium made an initial offer of 720p per share for S&N. S&N's shares closed yesterday at 757p.

Before the bid speculation began six months ago, S&N shares were trading at 531p.

Analysts suggest that S&N may eventually sell at a price closer to 800p a share. Some voiced surprise that S&N had rejected the chance to enter talks with the consortium.

In a note, Cazenove analyst Matthew Webb said: "It would be in the interests of S&N shareholders for the board to enter into negotiations."

The consortium claims that it has been approached by S&N shareholders who are concerned about the failure of the board to engage in talks.

S&N is scheduled to release a trading update next Tuesday.