S&N's binge-drinking claim 'irrelevant' in any bid vote, says City

SCOTTISH & Newcastle's claim that losing its independence could undermine the government's campaign against binge-drinking was dismissed as "irrelevant" by City analysts yesterday.

As the crossfire built up between S&N and its would-be takeover suitors, Carlsberg of Denmark and Holland's Heineken, the Scottish brewer said a major part of the campaign for responsible drinking involved the constructive engagement of a locally headquarted business.

An S&N spokesman was reported as saying: "Do you think that same constructive support would come if S&N is run from Amsterdam?"

But one City analyst said yesterday: "S&N will have to come up with a lot better than this to preserve its independence.

"To talk about binge-drinking in terms of where the head office is based is not credible. It's very early days yet, but however this battle turns out it will not be decided in terms of social issues like binge-drinking, but price and shareholder value."

A City fund manager commented: "Rightly or wrongly, institutions voting on any bid, if it actually materialises, will not be remotely interested in the issue of responsible drinking.

"The decision will be made on the price offered, with between 750p and 800p a share now being touted as the realistic starting point for any possibility of an S&N board recommendation."

S&N's shares closed last night up 9.5p at 767p.

The consortium, whose advisers are Lehman Brothers for Carlsberg and Credit Suisse for Heineken, said on Wednesday that if a bid was successful the Danish brewer would take S&N's 50 per cent interest in Baltic Beverages Holdings in which Carlsberg is already the other partner. It would also get the Kronenbourg subsidiary in France and Greece.

Heineken would pick up S&N's UK business and other European markets.

Analysts poured cold water on speculation that S&N might consider selling its BBH stake to return cash to shareholders in a bid to preserve its independence.

One said: "S&N's stake in BBH is the crown jewel and my understanding is that they would have to offer it to their partner, Carlsberg, first anyway.

"But such a scenario is highly unlikely as it would mean the end of S&N as a serious international brewer if it got rid of the fastest-growing part of its international empire."

S&N has warned the consortium that it may face difficulties in getting minority shareholders in BBH, which account for 10 per cent of the shares, on board for a full takeover.