Edinburgh-based brewer Scottish & Newcastle, the target of a combined bid from Carlsberg of Denmark and Heineken of the Netherlands and has unveiled a strategy to thwart the takeover and, in the process, become "leaner" through measures that include the sale of its loss-making wholesale unit in France that supplies Kronenbourg beer to French bars to C10, France''''s largest independent beer wholesaler, for £85 million - a move opposed by Heineken - and an agreement to produce its beer at the Molson Coors plants to cut down costs in the UK.
It also reiterated its opposition to 750 per-per-share bid from its two continental rivals.
The two raiders have agreed to split up the S&N''''s operations among themselves with Carlsberg taking full control of Russia-based brewer Baltic Beverages Holdings (BBH), which it owns jointly with S&N. BBH controls over 85 per cent of Baltika, Russia''''s biggest brewer. (See: Scottish & Newcastle rejects improved bid from Carlsberg and Heineken)
Moreover, S&N issued a combative response to the takeover bid; Its CEO John Dunsmore vowed to "take full control'''''''' of BBH along with a minority partner to pay for the deal without issuing shares.
He declared that there was no possibility of working with Carlsberg again. S&N has also launched arbitration proceedings aimed at forcing Carlsberg to give up its stake in BBH. S&N said that Carlsberg had breached the terms of the agreement for BBH by making the bid approach.
In its Q3 trading update, S&N said that it believed it had a "robust case" in the arbitration proceedings over BBH and was confident it would be in a position to take control of the business.
Dunsmore said in a statement, "The value driven asset management approach to managing the business has proved its worth in the UK where S&N is the leader in one of the most competitive and valuable beer markets in the world - and where we have leveraged a 26 per cent beer market share to grow our share of the UK major brewers profit pool from 46 per cent to 60 per cent in the last three years.
"I believe that this entrepreneurial model can be extended to deliver further success in our other European markets. In addition, S&N''''s portfolio of brands is a unique selling proposition in world beer, and is also particularly well adapted to growing partnerships in developing markets.
"Let there be no doubt: for the team at S&N, shareholder value maximisation is paramount. Nothing is sacred. I passionately believe that Scottish & Newcastle will deliver value to its shareholders that vindicates our response to the consortium proposal."