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UK: S&N and Six Continents talks collapse - papers

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Talks between Scottish & Newcastle and Six Continents regarding the merger of their pub estates have broken down, according to reports in today's UK press.

S&N is thought to be rethinking its plans to refinance its pub business after what are believed to have been three months of talks with Six Continents. The merged business would have been the largest pub group in the UK, worth an estimated £4.5 billion with 3,400 managed pubs and turnover of £2.4 billion.

UK press reports said today that  Scottish & Newcastle will now return to plans to extract up to £2 billion in capital from its managed pub and estate.
 
However analysts believe the breakdown in talks may not be permanent. Nigel Parson, beverage analyst with WestLB Panmure said in a note today: "The merger of Six Continents and Scottish & Newcastle's pub divisions and subsequent float is too compelling to ignore and we do not view the breakdown in talks between the two sides as permanent.

"The deal would have allowed Six Continents to focus on hotels and Scottish & Newcastle on brewing. It also would have created a pub group that would have entered the FTSE 100. Synergy benefits would have been in the £50m - £100m range."

He continued: "It is clear that Six Continents is exploring all avenues to unlock value for shareholders. It is frustrating but we believe that patience will eventually be rewarded."


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