Consortium offer accepted by S&N

January 25, 2007: The Carlsberg Heineken consortium has finally won its battle to take control of UK brewing giant Scottish and Newcastle.

After weeks of negotiation S&N has accepted an offer from the two European brewers, buying collectively as Sunrise Acquisitions Ltd.

The offer values S&N's share capital at £7.8 billion.

The consortium will gain full control of Baltic Beverage Holdings, in which S&N and Carlsberg each had a 50% stake.

Commenting on the Offer, Jorgen Buhl Rasmussen, president and chief executive of Carlsberg, said: "This is a truly transformational transaction for Carlsberg. In a single step we have created the world’s fastest-growing global brewer. We now have full control of our destiny in Russia and other BBH territories and I am truly excited about the new opportunities this will present to us.”

Jean-Francois van Boxmeer, chairman and chief executive of Heineken, added: "This is a significant strategic step for Heineken. It gives us undisputed leadership in Europe and creates significant opportunities in profitable markets to grow the premium Heineken brand.

"Our proven ability to create value from mature markets, coupled with the step-change in revenue growth, will drive our future expansion. I look forward to welcoming the Scottish & Newcastle employees into our business and learning from their unique experience and skills.”

Sir Brian Stewart, chairman of S&N, said: “The management and employees of S&N have built a group with strong brands enjoying leading positions in both mature markets in Western Europe and growing emerging markets. These emerging markets include those covered by BBH, the prospects of which shareholders will be better placed to assess as a result of today’s announcement.

"The S&N board believes that the consortium’s offer delivers a fair value for S&N, reflecting its growth prospects, and will be recommending that shareholders accept.”

But the announcement has been condemned by the Campaign for Real Ale (CAMRA). Chief executive Mike Benner said: “The relentless obsession with pushing global lager brands is a failing strategy in the UK beer market and this is fueling consolidation and hitting profits hard. The inevitable result of consolidation is brewery closures, brand losses and less choice for Britain's consumers.”

He added: “The deal raises many questions for real ale drinkers in the UK. What impact will this have on traditional real ales such as John Smiths and smaller regional brands such as Magnet? We will be seeking reassurances from the new owners that they will invest in their real ale brands and breweries to meet the demands of today’s beer drinkers who are increasingly demanding real ale.”

CAMRA is concerned about the impact the takeover could have on WaverleyTBS, a major distributor of real ales, the contract brewing of Theakston’s Best Bitter and the partnership with the Caledonian Brewing Company.

It is expected that the takeover will be considered by the European Commission and CAMRA is calling for an in-depth review of competition and consumer choice in the EU beer market.

Mike Benner continued: “The lager-led approach of the global brewers has been flawed for years — consumers demand choice, quality and provenance. Fortunately the increasing number of small and independent real ale breweries in the UK are rising up to fill the void in the market where demand for local and regional beer continues to grow.”

Bob Stukins, CAMRA’s director of breweries campaigning, added: “This is a sad day for British brewing. S&N was the last remaining major brewer in British hands and the deal is unlikely to show any benefits for consumers.”

S&N's main real ale brand is John Smith’s cask. However it, also brews Theakston’s Best Bitter on behalf of T&R Theakston, and owns 30% of Scottish brewery Caledonian’s brands. CAMRA will be seeking assurances from the new owners that these enterprises will be preserved.