just Five Years Ago: Carlsberg, Heineken seal Scottish & Newcastle purchase
It was five years ago that Carlsberg and Heineken sealed their purchase of Scottish & Newcastle
It was five years ago this week that the brewing industry said its final farewell to Scottish & Newcastle. The UK-based company saw its shares cease trading on 25 April, 2008, after Carlsberg and Heineken teamed up to buy and then split up the firm.
The two European brewers came clean with their intentions six months earlier. What followed was a maelstrom of claim, counter-claim and mud-slinging, with Carlsberg and Heineken rubbishing one set of S&N's results in November, 2007, and S&N describing the two as “pathetic, desperate men clutching at straws”.
In January, 2008, however, agreement was reached among Carlsberg, Heineken and S&N when an improved offer in the region of GBP7.8bn (US$15.2) hit the table.
The transaction then closed, with Carlsberg taking full ownership of its Eastern European joint venture with S&N, Baltic Beverages Holding, as well as S&N's French, Greek, Chinese and Vietnamese operations. Heineken, meanwhile, took over S&N's presence in the UK and Ireland, as well as its Portuguese, Finnish, Belgian, US and Indian operations.
Within a year of the deal's completion, both Carlsberg and Heineken set about targeting cost savings; a result, no doubt, of the spend on S&N. Yet, looking at the pair's numbers a year later, it appeared that Carlsberg had emerged as the better-placed of the purchasers.
One analyst's description of Carlsberg's stock in early-2009 as a "bet on the Russian economy" now looked like a bet that had come good. The Danish brewer's half-year numbers in 2009 leant heavily on Baltic Beverages Holding, as profits came in above analysts' estimates for the period.
In early-2010, just-drinks' then-deputy editor, Chris Mercer, went so far as to suggest that Heineken had got a bum deal from the move. “Aside from (S&N's) 37.5% stake in United Breweries in India,” said Chris at the time, “it is difficult to see how the S&N deal improved Heineken's beer market growth prospects.”
Despite the cloud over Amsterdam three years ago, however, the balance slowly hit parity: Within 18 months, the golden goose of Russia began to look dangerously like a dead duck for Carlsberg. “The Russian beer market has changed immeasurably in a very short time,” we noted in August 2011. “Carlsberg would appear to have been caught flat-footed." A tough first half in 2011 saw Carlsberg cut its full-year guidance, with a three-fold leap in beer excise in Russia being held responsible for the poor numbers.
Five years on, and the prospects for Carlsberg and Heineken are very different.
Heineken, meanwhile, looks like it wants to augment its securing of control of JV Asia Pacific Breweries by branching out in markets like Africa and Latin America. Then, there remains the potential of India.
Irrespective of their differing positions on the global beer landscape, both Carlsberg and Heineken have looked like winners and losers at one point or other in the five years since they bought Scottish & Newcastle.
This swinging of the pendulum looks set to continue for another five years, at least.
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