Denmark & UK: Carlsberg plans to take over Scottish & Newcastle

Carlsberg has set in motion plans to take over Scottish & Newcastle, the brewer of Kronenberg and Foster's, Daily Mail reported April 30.

The Danish brewer, which is seeking bid advisers, said last Friday it would double its share capital. It is already in a joint venture with S&N in Russia's number one beer maker Baltika, which accounts for more than 40 per cent of Carlsberg's profits.

S&N has a stock market value of 5.9 billion and any takeover bid would be paid for in Carlsberg shares. Recent bid speculation suggested that South African drinks giant SABMiller and Diageo would mount a joint bid for S&N.

It is understood that Carlsberg felt it had to act to protect the Russian joint venture from falling into alternative hands.

The company said, however, that it had "no immediate bid plans."

"A bid was initially a defensive move," said a source close to the Danes. "But there is only one reason to create these new shares and that is to use them to buy S&N."

The Carlsberg Foundation, which has had a stranglehold on the company since the founder disinherited his son and left the brewery to Copenhagen university professors 200 years ago, donates profits to scientific research and investment in the arts.

Last week's proposal reduces the Foundation's share from 50 per cent to 25 per cent and creates thousands of "B" shares that can be issued to new owners and used to buy S&N.

The new dual structure leaves at least 51 per cent of the votes in the Foundation's hands, giving Carlsberg the firepower to buy S&N, while still enjoying the protection of the Carlsberg Foundation, therefore making it immune to a counterbid from the UK's number one brewer.

But senior sources said a takeover would be more like a friendly merger.

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