E-Malt.com News article: UK: Scottish and Newcastle chief admits takeover talks

Scottish & Newcastle chief executive John Dunsmore, who is waging a takeover battle against Carlsberg and Heineken, has admitted to staff that he may have to open talks with his pursuers, Scotland on Sunday posted on December 23rd.

In a pre-Christmas message the beleaguered chief executive maintained that the Danish-Dutch duo were trying to buy the company on the cheap, but in a letter to staff admitted that if "a more sensible approach is made the board of S&N would have to consider opening up a dialogue with the consortium".

He said: "At the end of the day it is my job to maximise the value of our business for shareholders. I am not interested in pursuing a course of action that defends S&N's independence at all costs, so if the consortium comes up with a thumping great offer then we may have to talk."

The letter is the first admission by Dunsmore that he may struggle to keep the firm independent. Last Monday the takeover panel set a deadline for Carlsberg and Heineken of midday on January 21 to make a formal offer. This was quickly rebuffed by the European brewing giants who said they "reserved the right" to go hostile in their takeover attempt and remained confident they could bring S&N to the negotiating table.

The Carlsberg-Heineken consortium first approached S&N in October, and unveiled an indicative 750p-per-share offer in November, valuing the firm at around £7.3bn.

Analysts now believe that the consortium is likely to come back in the new year with a third and final offer of about 770p per share.

But in his letter to staff, Dunsmore continued: "Tuesday's response by the consortium continues to confound us as they seem determined to press for talks based on a proposal that we rejected some time ago. So we wait to see what they do between now and 21st January.

"In the meantime we are continuing to pursue our arbitration case and anticipate that a ruling will be decided by June 2008.

"We have been advised that we have a strong case and we hope to publish more detail about that in the early part of January. There has been such a breach of trust by Carlsberg that I really believe now there is no going back."

Dunsmore also insisted that S&N could walk away with the 50-50 Russian joint venture Baltic Beverages Holding (BBH), transforming it into one of Europe's largest brewers. S&N has launched a legal action against Carlsberg in Sweden, claiming it is entitled to buy Carlsberg's share of BBH. Carlsberg says that the legal action has no merit.

Dunsmore said: "My job, and that of our directors will be to put forward a coherent strategy for S&N to deliver value and retain our shareholders' support over the longer term. A successful outcome at arbitration would offer us exactly that, we could turn out to be a bigger player in Europe with a controlling interest in the BBH powerhouse, creating an even more exciting place to work. Please be assured that whatever happens, we won't be bullied."


27 December, 2007