UK: Carlsberg mum on S&N bid, but analysts see it coming
Carlsberg has stayed silent over speculation it plans to bid for Scottish & Newcastle.
Speaking to just-drinks today (29 June) the Danish brewer remained tight-lipped when quizzed over recent press speculation suggesting it plans to buy Scottish & Newcastle.
A spokesperson from Carlsberg said: "We will not comment on rumours" when asked about the brewery's interest in the UK brewer.
A report by Reuters yesterday claimed that the heads of the Carlsberg Foundation, which owns 51% of the brewer's votes, told the news agency that a big deal was in the offing. Analysts firmly believe that it is S&N that is the sites.
In a research note released today by Dresdner Kleinwort seen by just-drinks, the investment bank's analysts said: "We put a 70% probability on an acquisition of S&N by Carlsberg. S&N has a 100% free float.
"There is strong industrial logic in putting S&N's and Carlsberg's businesses together - uniting the ownership of BBH (currently 50:50 owned by the two) would make it easier to manage and allow Carlsberg to capture 100% of the cash flows; gross synergies of an estimated £132m, partly offset by disposal dilution of £49m; a bigger balance sheet would make subsequent acquisitions easier. Both companies' managements have acknowledged the logic of a deal in the past."
It went on: "Carlsberg's strategic priority is to ensure that it does not lose its 50% stake in BBH...The only way for Carlsberg to be certain of keeping its 50% stake in BBH is to own 100%. The only way to get 100% is to buy S&N."
Carlsberg's controlling shareholder, the Carlsberg Foundation, recently changed its rules to allow Carlsberg to issue up to €6.9bn of new equity.
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