E-Malt.com News article: Russia & UK: Scottish & Newcastle ups pressure on Carlsberg over Russian venture

British brewer Scottish & Newcastle, which is fighting to head off a takeover bid from Carlsberg and Heineken, said January 8 it has submitted a detailed claim to an arbitration court to secure control of Russian Baltic Beverages Holding, its 50-50 joint venture with Carlsberg, amid a bitter row with co-owner Carlsberg.

S&N said it could save nearly $200 million per year if it gained full control over BBH. The Danish-Dutch consortium is offering 750 pence per share, or $14.4 million, for the brewery — in a so-called friendly bid. The company's board has rejected the offer and has refused to engage in talks with the suitors. The UK Takeover Panel has given the consortium until Jan. 21 to either formalize its bid for S&N or pull out.

S&N said in a statement it laid the claim with the Arbitral Tribunal in Stockholm arising from what it argues were breaches by Danish group Carlsberg of the BBH Shareholders' Agreement.

John Dunsmore, the S&N Chief Executive, said: "While the consortium continues to seek to acquire S&N's unique portfolio of assets on the cheap, we are continuing to explore fully every option to deliver shareholder value. Carlsberg's desire to terminate the BBH joint venture by circumventing the BBH shareholders' agreement provides a huge opportunity for us to take control of BBH through a successful arbitration process.

We have studied the implications closely with our advisers and believe that this would be in the best interests of our shareholders. Controlling BBH would make S&N one of the most attractive international beverage businesses."

In response, Carlsberg issued a separate statement on January 8 to reject S&N's claim.

However, S&N said it was confident it would be successful and that it would win the right to acquire Carlsberg's 50 percent share in BBH at "fair market value." A decision on the claim was due by July 3, it added.

On January 8, S&N charged that Carlsberg had misused confidential information, breached its duty of loyalty and other express provisions in the Shareholders Agreement, which together would damage the joint venture.

The British group said that outright control of BBH would lead to cost and revenue synergies totalling 100 million pounds.

Carlsberg said in reaction: "Carlsberg is delighted that S&N has finally provided further details of its misguided claims.

"It is now very clear that the claims are frivolous and have absolutely no merit."

Baltic Beverages Holding, which makes Russia's Baltika beer, has been a 50/50 joint venture since 2002.

Scottish and Newcastle, the maker of Foster's lager and Strongbow cider, last year rejected a hostile takeover bid from Carlsberg and Dutch peer Heineken worth 7.3 billion pounds (10.2 billion euros, 15 billion dollars).

Analysts expect the consortium to raise its bid before Jan. 21 to around 770 pence per share to bring S&N to the table.

"S&N is coming under pressure from its shareholders not to let the bid situation disappear entirely, because then the share price would tumble back down to 650 [pence] or so," said Trevor Stirling, an analyst at Sanford C Bernstein. "On the other hand, Carlsberg is under pressure to make sure that it doesn't … end up losing BBH altogether."


09 January, 2008