The Wall Street Journal-20080111-Scottish - Newcastle Declines New Bid but Opens Up to Talks
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Scottish & Newcastle Declines New Bid but Opens Up to Talks
LONDON -- United Kingdom brewer Scottish & Newcastle PLC rejected a sweetened GBP 7.6 billion ($14.88 billion) takeover proposal from rivals Carlsberg A/S and Heineken NV but said for the first time that it is willing to consider starting talks at a higher price.
Carlsberg and Heineken raised their offer to 780 pence a share, which S&N rejected as too low. The brewer said it would be prepared to enter discussions with the consortium only if it made a firm proposal of at least 800 pence a share, or a total of GBP 7.8 billion. Amsterdam-based Heineken and Copenhagen's Carlsberg already have made two indicative proposals to the Scottish brewer of Kronenbourg and Foster's beer and Strongbow cider but haven't yet made a formal offer. The previous offers -- at 720 pence a share and 750 pence a share -- were both rejected by S&N's board as too low.
S&N said it had considered the latest proposal carefully but concluded that it "still failed to reflect the unique strengths and market positions of the company and again failed to be competitive with the alternatives the company can pursue for delivering value to its shareholders."
Carlsberg and Heineken said they weren't prepared to make a hostile bid and that without a recommendation from S&N's board, the offer would lapse on Jan. 21 -- the deadline set by the U.K. Takeover Panel for the consortium to make a formal offer or walk away.
"Without the S&N board's cooperation, there will be no offer by the consortium," said Heineken Chief Executive Jean-Francois van Boxmeer.
Scottish & Newcastle shares rose 5.5 pence to 724.50 pence in London, with the wide gap a sign that many traders don't expect that condition to be met. In Amsterdam, Heineken shares dropped 1.38 euros ($2.02), or 3.2%, to 42.32 euros. In Copenhagen, Carlsberg fell 12 Danish kroner ($2.36), or 2%, to 604 Danish kroner.
The majority of the increase in the consortium's offer would be funded by Carlsberg to reflect a higher valuation of Baltic Beverage Holdings, the Russian joint venture between S&N and Carlsberg. Carlsberg is providing GBP 244 million of the proposed increase, while Heineken is providing GBP 49 million.
The valuation of BBH has been a point of dispute between S&N and Carlsberg, with S&N accusing the Danish brewer of trying to gain control of the venture "on the cheap." BBH operates 19 breweries in Russia, Ukraine, the Baltic countries and Kazakhstan.
S&N has started legal proceedings against Carlsberg that it hopes will force the Danish brewer to offer S&N its share of the highly profitable Russian joint venture.
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Roberta Cowan, Kimberly Vlach and Steve Goldstein contributed to this article.
