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Bid plan for Scottish & Newcastle Bid plan for Scottish & Newcastle
(30 minutes later)
Brewing giants Carlsberg and Heineken have said that they are in talks about forming a consortium to buy Scottish & Newcastle (S&N).Brewing giants Carlsberg and Heineken have said that they are in talks about forming a consortium to buy Scottish & Newcastle (S&N).
They said there was no guarantee an offer would be made for the firm, whose brands include Foster's, Kronenbourg 1664 and Newcastle Brown Ale.They said there was no guarantee an offer would be made for the firm, whose brands include Foster's, Kronenbourg 1664 and Newcastle Brown Ale.
If it went ahead, Dutch firm Heineken would take control of S&N's business in the UK and some other European markets. S&N said any forthcoming bid would be "unwelcome" and that it was committed to being an independent firm.
Meanwhile, Denmark's Carlsberg would take over the rest of the firm. Edinburgh-based S&N is the largest UK-owned brewing company.
This includes S&N's East European brewer Baltic Beverages Holding, and its businesses in France and Greece. Break-up plans
"S&N is confident in its future as an independent group with a combination of strong growth in emerging markets and cash generation in developed markets," it said.
I think from a strategic point of view it's obviously a good deal for Heineken and Carlsberg SNS Securities analyst Richard Withagen
"S&N strongly urges shareholders to take no action at this time."
If Denmark's Carlsberg and Holland's Heineken do go ahead and make a bid, their plan is to split S&N between them.
Heineken would take control of S&N's main business in the UK, and some other European markets.
While Carlsberg would take over S&N's operations in France and Greece.
Carlsberg would also gain full control of Russia-based brewer Baltic Beverages Holdings, which is currently jointly owned by it and S&N.
Boss leavingBoss leaving
S&N has long been seen as a possible takeover target, and in lunchtime trading its shares were up 102p, or 16%, at 738.5p. S&N has long been seen as a possible takeover target, and in lunchtime trading its shares were up 19% to 760.5p.
S&N BRANDS KronenbourgFostersStrongbowNewcastle Brown AleJohn Smith's
Carlsberg and Heineken had both been named as potential individual bidders.Carlsberg and Heineken had both been named as potential individual bidders.
Diageo and SABMiller are other drinks firms which have been linked with a possible takeover.Diageo and SABMiller are other drinks firms which have been linked with a possible takeover.
Earlier this year, Carlsberg restructured, giving it more scope to raise capital and therefore take part in merger or takeover activity.Earlier this year, Carlsberg restructured, giving it more scope to raise capital and therefore take part in merger or takeover activity.
Last month, S&N's chief executive Tony Froggatt said that he was calling time on his career at Britain's biggest brewer.Last month, S&N's chief executive Tony Froggatt said that he was calling time on his career at Britain's biggest brewer.
He will be succeeded next month by John Dunsmore, currently head of the company's UK and European brewing operations.He will be succeeded next month by John Dunsmore, currently head of the company's UK and European brewing operations.
Strategic move
One analyst said he believed Scottish & Newcastle investors would not be willing to sell for anything less than 750p a share.One analyst said he believed Scottish & Newcastle investors would not be willing to sell for anything less than 750p a share.
"It is early days but clearly Scottish & Newcastle is in play and the market is reacting very strongly to this," said Clem Chambers, from investor website ADVFN.com. "It is early days, but clearly Scottish & Newcastle is in play and the market is reacting very strongly to this," said Clem Chambers, from investor website ADVFN.com.
Scottish & Newcastle was the world's seventh largest brewer in 2006 in terms of total sales volumes. Heineken and Carlsberg were ranked fourth and fifth respectively. Fellow analyst Richard Withagen of SNS Securities said a joint Heineken-Carlsberg takeover of S&N would make good sense.
"I think from a strategic point of view, it's obviously a good deal for Heineken and Carlsberg," said Mr Withagen.
"Heineken would gain market leadership in the UK and become the number two in Belgium and Portugal and a leading market player in Finland."
S&N was the world's seventh largest brewer in 2006 in terms of total sales volumes. Heineken and Carlsberg were ranked fourth and fifth respectively.