As S&N have now sold off their pub estate, theres a great chance that they will become a takeover bid.
This share could rise substantially soon.
What does everyone else think?

Source:- Sunday Herald

McEwan’s Lager ‘dead within 18 months’

By Ian Fraser and Julia Fields

McEwan’s Lager, once a serious challenger to market leading Tennent’s will be “dead within 18 months”, according to sources at rival brewers.
Mike Lees, managing director of Tennent Caledonian Breweries, said: “That [McEwan’s Lager] will not be on the market in 18 months.

“It is dead. They’ve been cannibalising it [with Miller] – and the take home trade don’t sell it any more.”

McEwan’s sponsored Rangers in a ten-year, 1 million plus, shirt sponsorship throughout the 1990s, a move which could have alienated potential drinkers from rival clubs, such as Celtic.

Lees conceded that McEwan’s was viewed as a serious challenger to Interbrew-owned Tennent’s – which today commands a 50.1% share of the Scottish lager market – as recently as the mid-1990s. But latest market data from Neilsen shows McEwan’s share of on-trade lager sales has collapsed from 6.7% in 2001 to just 2.6%.

“Two year’s ago they [S&N] had 20.3% of the Scottish lager market,” said Lees. “They’ve now got 15.6%, so they’ve lost a 5% share in two years – and that’s the growth part of the market.”

One industry observer added: “McEwan’s Lager had a real chance to take on Tennent’s as recently as 1995. But then S&N switched their attention to Miller and tried to build that up.

“Now, since they only have the rights to Miller for another five to six years, they’re about to have a go with Foster’s. But all this jumping about is playing havoc with their position in the market.”

Meanwhile, S&N has selected a preferred bidder for the disposal of land worth more than 25m next to its Fountain Brewery in Edinburgh.

The company will undertake detailed negotiations with London-based developers Grosvenor, which intends to build offices and housing on the eight-acre site.

The property, the site of S&N’s former kegging facility, has been sought after by developers. Over 15 parties submitted bids before the list was whittled down to Scarborough, Cala, Highland Properties, Grosvenor and Edinburgh-based consortium Deanway.

However a spokesman for S&N denied there is any intention to shut down the Fountain Brewery and transfer production to its four breweries in England.

“The brewery works fine and it is a key part of our network. But the business is looking at ways to improve operating efficiencies right across Europe.”

This weekend there is renewed speculation that S&N may be a bid target, with SABMiller replacing last week’s Diageo as the Edinburgh-based firm’s most likely suitor.

01 February 2004

ScotInvestor - thanks for posting this.
Bid speculation may be useful for the share price!

(Source: Scotland on Sunday)

Brewing up a takeover storm at S&N

Shares have surged amid talk of bids from global rivals and sector consolidation, but a move is far from certain

IAIN DEY
idey@scotlandonsunday.com


OVER the past six weeks or so, Scottish & Newcastle has seen its shares spark into life, a rise of about 15% since the start of October. It is enough to have increased the value of chairman Sir Brian Stewart’s stake by about 130,000 and whetted the appetite of the investment bankers, dealers and lawyers who believe it points to one thing - a bid is coming.

Ask the analysts who pore over every move in the global brewing industry and they struggle to see which of the superpowers of beer are really likely to want to pounce on the Edinburgh-based company - despite its numerous attractions. Yet, in an industry that is on the cusp of the next big phase of consolidation, it is difficult to see where Scottish & Newcastle fits into the grander scheme of things in its current form.

Three years ago, Heineken’s outgoing executive chairman Karel Vuursteen brought an end to his lengthy rein at the Dutch brewing empire by prophesying that a new wave of mega-mergers was about to begin. It would be a "dance of the elephants" which would leave just a handful of brewers left, he said. And Vuursteen did not give the impression that he wanted the family-controlled business to get involved in this process.

The first elephantine dance steps have already been made. In March, Belgium’s Interbrew, owner of Stella Artois and Tennent’s Lager to name but a few beers, struck a 6bn all-share merger with Ambev, South America’s largest brewer with brands including Brahma and Skol. In terms of volume, it is now the world’s biggest brewer, ahead of Anheuser Busch, brewer of Budweiser.

Separately, a tie-up between Canada’s Molson and Coors of the US that was first announced in July looks set to go ahead - despite the best efforts of a group of dissident Molson cousins who don’t think the deal represents good value.

All eyes are focused on the next big deal, which is why the speculation surrounding S&N’s future never subsides for long.

"I have one fairly big problem with this whole S&N bid theory," said one brewing analyst last week. "And that’s just finding someone who actually wants to buy it.

"There’s great logic for any of the middle-sized brewers - the S&Ns and the Heinekens - to sell out to one of the bigger players as consolidation gets going.

"But there are very few parties who would be big enough to do it and even fewer who would want to - certainly at 425p a share, where S&N is at the moment. And most of those who may want to do a deal would struggle to get regulatory approval.

"Only really SABMiller or Anheuser Busch would be able to do it, the rest would face problems in the UK or French market, or, in the case of Carlsberg, just aren’t big enough."

SABMiller has been repeatedly linked with a move for S&N. At the start of the year the gossip reached fever pitch but a bid never appeared. Two weeks ago the speculation flared again when SABMiller chief executive Graham Mackay said he could raise 1.1bn to fund an acquisition if he so desired. But the tongues had barely begun wagging when Mackay qualified his comments by adding that the beer market of western Europe was "not particularly attractive" from an acquisition point of view.

Over the past decade Scottish & Newcastle has transformed itself from a regional brewer into a global player. It is the biggest brewer in the UK, France, Russia, Finland and all three baltic states. It holds number two spot in Portugal, Kazakhstan, Ukraine, Belgium and Greece. It also has a smattering of interests in places such as Greece and India. In global terms, it ranks about sixth or seventh, depending on how you cut the numbers.

But its strengths lie predominantly in the declining markets of western Europe, which the global beer groups are now trying to avoid.

While a hardcore of analysts and investors like to throw up the name of Anheuser Busch now and again, an equally steadfast camp insist this suggestion is nonsense.

Anheuser has stated quite clearly that its ambitions lie in places such as China and Latin America where beer consumption is still actually increasing.

And S&N is no different. It too has been on the acquisition trail, buying cider maker Bulmers, shoring up its interests in Portugal and making moves into India. It was also involved in the bidding for Peroni, which ultimately fell into the hands of SABMiller. And through its takeover of Finnish brewer Hartwall, it has gained its share of the top spot in Russia’s beer market.

Although it is not the focus at the moment, S&N is likely to make further acquisitions if it avoids falling prey to a bigger rival. Apparently S&N chief executive Tony Froggatt has given serious consideration to a handful of other possible deals this year.

S&N has been repeatedly linked with a move for Mahou San Miguel in Spain. Some suggest it could be interested in Cantrell & Cochrane, which would consolidate its cider interests. It could also make a move for the rest of Australia’s Fosters to strengthen its existing ownership of the brand in Europe. But none of these deals would be sufficiently transformational to give a predator indigestion.

Being the biggest brewer in the UK and Europe is all well and good. Now Froggatt has done the dirty work by announcing cost-cutting plans to close the flagship Fountain brewery in Edinburgh and the Tyne brewery in Newcastle, that side of the business looks more attractive to a potential buyer than it did 12 months ago.

But if there is a reason to buy S&N, it is to get access to its Russian business. Baltika, its joint venture with Carlsberg, is already contributing about 20% of S&N’s profits. And it keeps on growing.

There are risks in Russia, as was proven recently by the clampdown on beer advertising, but it is still the jewel in S&N’s crown as things stand.

"It is possible," said another City brewing analyst, "that someone may want to make a bid for S&N to get their hands on Baltika. And it could be a rationale for S&N and Carlsberg to get together.

"But if they did do that, a combined Carlsberg and S&N would have over 40% of the UK market. So big chunks of both companies would have to be sold off and it would get to a point where you’d have to ask whether it was worth the bother. And nothing would happen without the say-so of the Carlsberg trust anyway."

Here is another reason why S&N is often tipped as a takeover candidate. Unlike the other big brewers, there is not a chunky family stake that could block a takeover. Heineken, Anheuser Busch, Carlsberg suffer from this, and Molson is finding to its detriment how big an issue family stakes can be. SABMiller, meanwhile, has issues with its dual listing.

Basically, if you want to buy a big brewer, it is easier to buy S&N than any other as its shares are in the open market. The increased likelihood of a takeover puts S&N’s shares at a premium to Carlsberg, its closest peer. As it doesn’t have this protective influence, some analysts speculate that S&N could be ripped apart once consolidation reaches a certain stage.

A recent report from Dresdner Kleinwort Wasserstein, which proclaimed that "the endgame is nigh" in the consolidation of the global brewing industry, said: "To go from four European brewers (Heineken, InBev, Scottish & Newcastle and Carlsberg) down to three would effectively require one to be taken apart and distributed piecemeal among the remaining three.

"A joint bid by, for example, Heineken and InBev to acquire Scottish & Newcastle is not beyond the realm of possibility but we believe it would be complicated."

Even though any potential deal to take out S&N would inevitably be complicated, there seems little possibility of the speculation surrounding S&N’s future subsiding any time soon. There is still a long way to go in the consolidation of the global brewers, but S&N seems to be caught in the middle.

Perhaps the Edinburgh firm will be left on the shelf leaving Froggatt and his successors free to add to the group’s portfolio of brands through another string of bolt-on acquisitions. But until the rest of the world’s big brewers show their cards, the rumours won’t disappear.

remember next resitance is 444p. And i think we will beat that this time around esp with growth in Russia and Ukraine.

I do hope Yushchenko wins out there by the way.

scot - Many thanks for the S on S piece. Interesting reading.

Times
Directors' dealing: THEMUTUAL.NET (director sells stock for 81,000 stg) -
Rumour of the day: SCOTTISH & NEWCASTLE (rumours of predatory interest from
Anheuser-Busch)

does anyone know when we get dividends this year from this?

share price has been rising well this year

I think that the saying "Theres no smoke without fire" may apply to Scottish and Newcastle's situation. Have held these shares for 3 years or so and added more when T. Hemmings acquired a holding . Sctn has been associated with many preditors but,the most obvious candidate is Carlsberg since both it and Sctn have 50-50 ownership of Baltic Beverages Holdings (BBH) which has a 37% share of the growing beer market in Russia. I think Putin thinks well of this situation since beer is helping to ween the public off of excessive Vodka consumption. Since Carlsberg is changing its cumbersome ownership structure which, has probably held up any merger with Sctn, the interest in Sctn shares have been more pronounced. I think Carlsberg would pay well above current market level to secure Sctn since it would then safeguard its ownership of BBH which has much potential. Sctn also owns 49% of United Breweries which own Indian Brands Kingfisher and Sandpiper. Bulmers were also acquired when they went through a bad patch and have since grown well , not to leave out names like Fosters in Europe and Newcastle Brown Ale. There could well be a bidding war for this one and the volatile market that pevails at present could well bring things to a head. sp 646p

scotinvestor ....late reply but ex div was 28.3.07 (14.44p) should have been paid 2.5. Next ex div will be mid September for Interim.

Easy going thread this, 3 months to get an answer re divis. Scotinvestor log on to the company website, all the info you rquire will be on there.
jj50 pop in and have a coffee sometime....soon :-)

optimistic- I make it 15 months.

Guscavalier.. you're right! LOL

opto ... I'll see you there :-)

Scottish & Newcastle PLC
03 July 2007


3 July 2007


Scottish & Newcastle plc

Pre-close Trading Update

Scottish & Newcastle has issued the following trading update ahead of the close
period prior to our interim results announcement on August 7.

Branded beer growth continues its momentum right across the group, with our
brands outperforming in their respective markets. Our strategy of delivering
value growth in mature markets and volume growth in developing markets continues
to deliver.

While in some markets there are particular challenges, we remain confident that
performance for the full year will meet expectations for the group as a whole.


UK

S&N UK continues to extend its leadership and build value in one of the most
competitive markets in Europe. In the first five months of 2007, our Beer and
Cider market share growth has accelerated, driven by increases in investment in
marketing, and a portfolio approach that is unmatched by our competitors.

In Beer, we expected a relative decline in sales for the UK market in the first
half, with a corresponding benefit in the second due to the timing of last
year's World Cup sales. This has been accentuated by poor weather in the first
half, resulting in a market decline of 5%. Despite this, all our key brands -
John Smith's, Foster's, Kronenbourg and San Miguel - have grown share of
category. We expect the second half will show broadly level beer volumes for the
market as comparatives improve, despite the potential impact of the smoking ban.

In Cider, we have also gained share in a market which has continued to grow
strongly despite the poor weather. To capitalise on the Cider opportunity we
have invested heavily in the first half, skewing our annual marketing spend
ahead of the peak summer period.

During the first half, we have continued to counter input cost pressures, and
have put in place a number of initiatives which will see the first 10m of new
cost savings phased into the UK across the second half of 2007.

As a result of all these factors, operating profit in the UK will be lower in
the first half compared with the previous year; however we believe that
performance for the full year in our UK business will meet expectations.


International

Our International division continues to grow branded beers in their respective
markets, particularly Sagres in Portugal and Newcastle Brown Ale in the US.

In France, we are seeing further growth in branded beer through a continued
focus on marketing and innovation behind our top 3 brands. Combined volume share
of Red and White, Kronenbourg 1664 and Grimbergen has increased by 60 basis
points in the key off trade channel to April 2007.

Trading in the French wholesale business remains extremely challenging and this
remains a key management priority.
In addition, the recently-resolved dispute at our Obernai plant will also have
some impact.

In India, where we are market leader, our Kingfisher brands are performing
strongly in a market in double digit growth. In China we are building on our
success from last year where volumes grew by 29%.


Baltic Beverages Holding (BBH)

BBH remains leader in most of its markets, including Russia, where Baltika's
unrivalled portfolio continues to deliver. BBH results for the first half of
2007 will be announced on August 1.

The Russian market has continued to benefit from an unseasonably mild winter,
contributing to cumulative market growth of more than 20% for the period so far
to May, although as we move into the second half of the year, the comparatives
get much tougher following the growth of 14% in the market from July to December
last year.

Within this growing market, the Baltika brand portfolio continues to outperform.
Baltika's market share across the same period to May stands at 37.6%, more than
200 basis points up on the previous year, a trend that we expect to continue for
the remainder of the year.


Financial expenses and taxation

Financial expenses have been and will continue to be adversely affected by
significant interest rate rises, as well as increasing investment levels in BBH.

Our tax rate for the year however is now expected to be lower than last year,
following the reduction in the underlying rate of corporation tax in the UK from
30% to 28% and tax settlements relating to prior years.


sp 628.5p

SP 580p in this mornings sell off, despite speculative gains only a couple of days ago about a carlsberg bid again.
Do people think this bid is imminent / likely ? (This thread started in 2003 on the same theme!)
Don't know much about Carlsberg but would they require a lot of credit to finance a takeover or is it loose change / cash in the bank?
Thanks

Elsewhere, Scottish & Newcastle gained 7 to 632 on news it could be a possible bid target after it was revealed Carlsberg AS, has 70 bln dkr available for acquisitions, board chairman Povl Krogsgaard-Larsen said. paul30661- mentioned in the media today.

sctn mentioned on p11 of shares mag this week (vol 9 issue 36). FOREMOST believes that takeover by Carlsberg will happen and shares concludes that on a PE of 17.4 falling to 15.5 , the sp does not contain a takeover premium.

LONDON (Thomson Financial) - Scottish & Newcastle PLC's 50 pct stake in Baltic Beverages Holding is not for sale, industry sources have said.

Sources told Thomson Financial News they could not 'conceive of the possibility' of the stake in the joint venture with Carlsberg becoming available.

Danish daily Berlingske Tidende today reported Carlsberg chairman Povl Krogsgaard-Larsen as being prepared to buy S&N out of the Russian and Baltic States-focused brewer for 30-40 bln dkr -- up to 3.64 bln stg.

'We are ready,' Krogsgaard-Larsen said. 'We can clearly see advantages in getting 100 pct ownership of BBH. We've built up a capital reserve so we can react the day it becomes possible [to buy S&N's share of BBH].'

A spokesman for S&N responded: 'We are very happy with the relationship with Carlsberg and the joint ownership of BBH and that is and will remain the position.'

Speculation of a merger or a takeover of S&N by Carlsberg resurfaced again this week after Carlsberg announced the appointment of Joergen Buhl Rasmussen as chief executive following the departure of Nils Smedegaard Andersen who steps down on October 1.

Rasmussen, who has been Carlsberg's representative to BBH and has close links with S&N, told a news conference on his appointment: 'I see no need to make large changes. My appointment has nothing to do with a potential purchase of S&N.'

Guscavalier comment: It is no secret that Carlsberg would like to own 100% OF BBH. However, it will have to make a full bid or merge with sctn to do so. This is likely so as to keep other predators as bay. I would not be surprised to see others enter the fray once Carlsberg makes a move. sp620p

well in told everyone here to buy S&N..........ok, its been a medium hold for me but it was a solid share to have in turbulent times..........almost doubled my money in 4.5 years, quite good i think

hooray! glad to see you have a proper stock in your portfolio ..... as you say, t/o has been on the cards an awful long time but now should come to fruition

been very rewarding especially when dividend payments are included. Will continue to hold for now.