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Brewer S&N agrees £7.8bn takeover Brewer S&N agrees £7.8bn takeover
(about 4 hours later)
UK brewer Scottish & Newcastle (S&N) has agreed to be bought by Carlsberg and Heineken for £7.8bn ($15.3bn).UK brewer Scottish & Newcastle (S&N) has agreed to be bought by Carlsberg and Heineken for £7.8bn ($15.3bn).
S&N is the UK's largest brewer, with brands such as Newcastle Brown Ale and Foster's, and is the world's seventh largest brewer by sales volume.S&N is the UK's largest brewer, with brands such as Newcastle Brown Ale and Foster's, and is the world's seventh largest brewer by sales volume.
The company is set to be split up between Carlsberg and Heineken when the takeover is completed.The company is set to be split up between Carlsberg and Heineken when the takeover is completed.
S&N employs about 3,300 staff in the UK, with breweries in Manchester, Reading, Dunston and Tadcaster.S&N employs about 3,300 staff in the UK, with breweries in Manchester, Reading, Dunston and Tadcaster.
'Transformational''Transformational'
S&N received its first bid approach from Carlsberg and Heineken in October last year, when the two firms offered 720p-per-share. The approach was rejected, as were two further offers.S&N received its first bid approach from Carlsberg and Heineken in October last year, when the two firms offered 720p-per-share. The approach was rejected, as were two further offers.
PLANNED S&N BREAK-UP Heineken to own S&N's UK operations including Strongbow cider, John Smith's beer, Newcastle Brown Ale and Foster'sHeineken to acquire S&N's operations in Portugal, Ireland, Finland and BelgiumCarlsberg to take full control of BBH, which includes the Baltika beer brandCarlsberg to acquire S&N's assets in France and Greece Carlsberg to acquire S&N's assets in Asia, notably in Vietnam and China Scottish & Newcastle's share price PLANNED S&N BREAK-UP Heineken to own S&N's UK operations including Strongbow cider, John Smith's beer, Newcastle Brown Ale and Foster'sHeineken to acquire S&N's operations in Portugal, Ireland, Finland and BelgiumCarlsberg to take full control of BBH, which includes the Baltika beer brandCarlsberg to acquire S&N's assets in France and Greece Carlsberg to acquire S&N's assets in Asia, notably in Vietnam and China Scottish & Newcastle's share price class="" href="/1/hi/scotland/edinburgh_and_east/7208757.stm">Scottish reaction
However, last week S&N said it had begun talks with the two firms when they proposed an 800p-per-share offer, an offer it has now agreed to.However, last week S&N said it had begun talks with the two firms when they proposed an 800p-per-share offer, an offer it has now agreed to.
"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," S&N said."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," S&N said.
Heineken said it would achieve savings of £120m annually, new distribution in the UK and access to the UK's fast-growing cider market, as well as access to developing markets.Heineken said it would achieve savings of £120m annually, new distribution in the UK and access to the UK's fast-growing cider market, as well as access to developing markets.
The break-up plan means Heineken will acquire S&N's British operations, including Strongbow cider and John Smith's beer.The break-up plan means Heineken will acquire S&N's British operations, including Strongbow cider and John Smith's beer.
Carlsberg said the benefits of the deal included full ownership of BBH - the Russian-based joint venture between it and S&N - plus exposure to growth markets and cost savings.Carlsberg said the benefits of the deal included full ownership of BBH - the Russian-based joint venture between it and S&N - plus exposure to growth markets and cost savings.
"For Carlsberg, it is a transformational transaction, which will deliver a major increase in its operational scale and long term growth prospects," said the firm's chief executive Jorgen Buhl Rasmussen."For Carlsberg, it is a transformational transaction, which will deliver a major increase in its operational scale and long term growth prospects," said the firm's chief executive Jorgen Buhl Rasmussen.
"In a single step, we have created the world's fastest-growing global brewer.""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," he added."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," he added.
Ownership of BBH, which owns Baltika beer, had led to a row after S&N said Carlsberg's role in the takeover approach had broken the joint-venture agreement.Ownership of BBH, which owns Baltika beer, had led to a row after S&N said Carlsberg's role in the takeover approach had broken the joint-venture agreement.
PensionPension
S&N BACKGROUND 1749: William Younger brewery established in Edinburgh1913: William Younger and William McEwan merge to form Scottish Brewers1960: Scottish Brewers merges with Newcastle Breweries to become Scottish & NewcastleOctober 2007: S&N rejects first takeover approach from Heineken and CarlsbergJanuary 2008: After rejecting three bid approaches, S&N finally agrees to an 800p-a-share offer from Heineken and Carlsberg S&N BACKGROUND 1749: William Younger brewery established in Edinburgh1913: William Younger and William McEwan merge to form Scottish Brewers1960: Scottish Brewers merges with Newcastle Breweries to become Scottish & NewcastleOctober 2007: S&N rejects first takeover approach from Heineken and CarlsbergJanuary 2008: After rejecting three bid approaches, S&N finally agrees to an 800p-a-share offer from Heineken and Carlsberg class="" href="/1/hi/scotland/edinburgh_and_east/7208923.stm">History of the company
S&N said guarantees from Heineken would be put in place regarding the company's UK pension scheme.S&N said guarantees from Heineken would be put in place regarding the company's UK pension scheme.
"As part of the agreement, Heineken will also accelerate the deficit payments previously agreed with S&N, with an injection shortly after closing £50m into the plan," the firm said."As part of the agreement, Heineken will also accelerate the deficit payments previously agreed with S&N, with an injection shortly after closing £50m into the plan," the firm said.
The deal still requires approval by the European Commission as well as other competition bodies and is tipped to be completed by the second quarter.The deal still requires approval by the European Commission as well as other competition bodies and is tipped to be completed by the second quarter.
Shares in Carlsberg, Heineken and Scottish & Newcastle all climbed more than 2% after the announcement.Shares in Carlsberg, Heineken and Scottish & Newcastle all climbed more than 2% after the announcement.