November 5, 2007
just-drinks.com editor's weekly highlights
This Wednesday (7 November) will be a key day in the drinks industry this week as it’s the day that BBH, the joint venture between Scottish & Newcastle and Carlsberg, unveils its third quarter trading figures.
Expect a robust set of figures from the East European brewer, even against tough comparisons on last year. Such a performance is likely to put further pressure on Carlsberg and may back the argument that, by launching a hostile takeover bid for the whole of S&N with Heineken, the Danish brewer is trying to buy BBH on the cheap.
Certainly, the current bid seems to undervalue the BBH operation, and analysts believe that a price of nearer 800p a share for S&N (rather than the current 720p) would more accurately reflect BBH’s growth potential.
The momentum in this fight now appears to be with the UK brewer, despite initial doubts about its defensive strategy.
Last week, S&N initiated legal proceedings against Carlsberg over the latter's alleged breach of the shareholders' agreement regarding BBH. S&N believes Carlsberg's joint bid with Heineken represents an effective breach of the confidential shareholder agreement, which would allow S&N to launch a counter-bid for Carlsberg's share in the fast-growing East European beer unit.
The board of S&N has initiated formal arbitration proceedings with the Arbitration Institute of the Stockholm Chamber of Commerce, but Carlsberg has countered that there is "no foundation to S&N's misguided claims". The feeling amongst many industry watchers, however, is that S&N has a case that should be heard and, moreover, wouldn’t have headed down this road if it didn’t have a shot at winning it.
Over the weekend, the story took another twist when The Mail on Sunday reported that S&N is going to demand that the independent panel in Sweden set the price for BBH at which Carlsberg would be obliged to sell.
Current thinking suggests that the 720p bid values BBH at between GBP3.5bn (US$7.28bn) and GBP4bn. If S&N could raise that amount of cash – and here it may look for another global brewer to partner it – then S&N would certainly be in the driving seat.
Until next time...
Olly Wehring, Managing Editor
Scottish & Newcastle faces a tough battle to defend itself from the joint takeover launched by Carlsberg and Heineken. But today’s announcement of a legal challenge to Carlsberg over alleged breaches of the shareholder agreement governing their 50/50 joint venture, Baltic Beverages Holding (BBH), suggests it will not be going down without a fight. Ben Cooper reports.
This month’s briefing provides a sector-by-sector overview of the beverage market in India. We look at the growing importance of the wine industry and how high taxation is a big hurdle to its promising growth. The major players in the spirits industry are profiled, including United Breweries and Seagram, and the Indian regulation of liquor production and imports is reviewed. The entry of new international players in the Beer market, such as Heineken, Cobra, Anheuser-Busch and Carlsberg, is discussed, along with the proposed de-linking of beer from spirits. We also look at the latest happenings in the soft drink sectors, namely carbonated soft drinks, fruit juice, packaged water, energy drinks, hot drinks and milk.
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