Carlsberg and Heineken eye up S&N

27 August, 2008
Page 5 
A successful joint acquisition of Scottish & Newcastle would see Carlsberg become the most powerful brewer in France and Heineken transform its fortunes in the UK.

For most observers the surprise was the Danish and Dutch brewers forming a consortium to break up the UK's last remaining national brewer, which also has market leadership in France.

Carlsberg would get the French Kronenbourg business, which claims 36.6 per cent market share in the country, plus a brewery in Greece, where S&N has market position number two with a 10 per cent share.

The real prize for Carlsberg would be complete ownership of BBH, the Russian-based brewing operation it runs as a 50-50 joint partnership with S&N.

At the time of going to press, S&N had rejected the consortium's initial £6.8 billion bid, claiming that Carlsberg was trying to get BBH "on the cheap".

Scottish & Newcastle claimed Carlsberg's actions had triggered clauses in the joint-venture contract which obliged Carlsberg to offer S&N its 50 per cent stake.

S&N said it "had been content with the joint ownership arrangements and had wanted them to continue for the long term", but it was now considering whether to seek outright ownership itself or try to bring in a new partner.

SAB Miller would almost certainly seize on any opportunity for a way into BBH.

If Carlsberg was to gain control of BBH it would get outright ownership of the leading brands in Russia, Kazakhstan, Latvia, Lithuania and Estonia, plus number three position in the Ukrainian market.

The deal would make Heineken the leading brewer in the UK, a problem market for the brand which has struggled to make any real impression as a premium brand.

One possible outcome is that a Carlsberg-owned Kronenbourg 1664 would move to Carlsberg's own UK company's portfolio, allowing Heineken to become the running mate to S&N's Foster's in lucrative on-premise distribution contracts.

Heineken would also take over S&N's operations in Finland, Belgium and Portugal - it has the number two position in each - and S&N's cider units in the UK, Finland and Belgium.

Carlsberg and Heineken have yet to declare their intentions for S&N's 37.5 per cent stake in United Breweries - India's leading brewer - or its 17.5 per cent holding in China's fifth biggest brewer.

To follow the latest developments, visit the Drinks International website: [http://www.drinksint.com]

Comment

Christian Davis

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