Europe: Citigroup claims S&N sale is best option for shareholders

The best option for Scottish & Newcastle shareholders is a sale of the business, according to a global brewing report by Citigroup, The Herald reported November 6.

"We expect S&N to pursue a vigorous defence of its shareholders' interests, but in our view maximum value appears to lie with the company being acquired," says the report.

It says investors believe that S&N is using its arbitration proceedings in Stockholm as a tactic, and that "the prospect of lengthy court proceedings and an uncertain outcome may persuade Carlsberg/ Heineken to raise their offer such that S&N management ceases to pursue the case."

Citigroup says Carlsberg is "highly unlikely" to want to relinquish its joint ownership of BBH, the subject of the Stockholm arbitration, while S&N shareholders are likely to be reluctant to allow or fund S&N to buy Carlsberg's stake at a very high price, even if it were possible.

The arbitration might help secure a high price for the Scottish brewer's BBH stake, but to maximise value fully that would need to be combined with a sale of the whole business, says the report.

It also questions whether S&N shareholders "would approve a 'defensive' move such as an acquisition or merger with another party."

07 November, 2007