EUR: Carlsberg, Heineken trash S&N’s results, plans, claims
The two European brewers, who have seen two proposed takeover offers for S&N rejected, said yesterday that the UK brewer's update, which included future strategic plans for the business, contained "no surprises".
S&N's performance in Western Europe, where the brewer said it has seen underlying market weakness in the third quarter, was described by the Carlsberg/Heineken consortium as "disappointing". "The Western European operations account for the majority of the profits and almost all of the group's cash flow from operations," the consortium claimed.
The two brewers also questioned S&N's value-creation initiatives, also announced yesterday, which include the sale of its French wholesale business, a long-term production and packaging agreement with Coors in the UK and the closure of a bottling plant, also in the UK.
"The raft of tactical initiatives … may very well not be in the long-term interests of the business and carry significant execution risk," the European brewers said.
Turning finally to S&N's comments on its arbitration case against Carlsberg regarding their joint venture in Eastern Europe, the consortium claimed the case had "no merit". S&N, which is hoping to gain full control of Baltic Beverages Holding from Carlsberg, said yesterday that it was "confident" that its claims that Carlsberg had circumvented the so-called 'shotgun' provision of BBH's shareholder agreement. Should this be proved by the Arbitral Tribunal, then S&N would have the right to acquire Carlsberg's stake in BBH.
"There continues to be no foundation to S&N's claims," the consortium said. "Contrary to what is stated … by S&N, Carlsberg is not a party to the BBH shareholders agreement (and so cannot be in breach of it) and neither therefore is a party to the arbitration. Pripps-Ringnes - a fully-owned subsidiary of Carlsberg - is a party to the BBH shareholders agreement and is the party that arbitration proceedings have been instituted against." According to Swedish law, Carlsberg and Heineken said, Pripps-Ringnes cannot be held responsible for actions by Carlsberg or the consortium in relation to the proposed offer.
S&N said yesterday that it was prepared to introduce a minority partner, should it succeed in gaining full ownership of BBH. CEO John Dunsmore said that the company was talking to his "enemies' enemies", adding that his diary "was not empty" when it came to such meetings. Dunsmore declined to give further details, however.
Jean-Francois van Boxmeer, Heineken's chairman and CEO, said: "In light of today's unconvincing trading update and list of tactical initiatives, we urge S&N's shareholders to continue to encourage their board to engage with the consortium."
Carlsberg's CEO, Jørgen Buhl Rasmussen, added: "The BBH arbitration process continues to be a smokescreen. We remain ready to sit down with the board of S&N to progress our 750p cash proposal at the earliest opportunity."
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