E-Malt.com News article: 1054

The Board of Scottish & Newcastle PLC (“S&N”) announced on May 13, 2003 that S&N has entered into a binding agreement to acquire full control of Sociedade Central de Cervejas (“Central de Cervejas”), the Portuguese brewer and distributor, in which S&N currently has a 49% stake. S&N has acquired the remaining 51% stake in the business from its joint venture partners.

In addition, S&N has entered into a binding agreement to acquire from the same joint venture partners, 100% of Sociedade da Agua de Luso (“Luso”), a leading producer of branded mineral and spring water, including the brand Luso, the number one bottled water brand in Portugal.

The total net cash consideration that will be payable on completion by S&N for these transactions is €342 million. S&N will also consolidate approximately €157 million of debt relating to the two businesses (although €70 million of this relates to S&N’s existing 49% investment).

The combined net assets (in relation to 100% of Central de Cervejas and 100% of Luso) as at 31 December 2002 were €234 million. The combined pre-tax profits in relation to 100% of Central de Cervejas and 100% of Luso for the year to 31 December 2002 were € 37 million (excluding exceptional costs and amortisation). The transaction is expected to be earnings enhancing in its first 12 months of ownership.

Completion of the transactions, which are subject to approval by the European Competition Authorities is expected to take place by the end of June 2003.
John Nicolson, Chairman of International Beer at S&N commented: “The announcement is the logical evolution of a very successful joint venture partnership. Since the joint venture’s formation nearly three years ago, the Central de Cervejas business has performed extremely well, under our strong and committed local management team. The investment in Portugal demonstrates the success of our strategy of working alongside local partners and investing in businesses with strong market positions, strong brands and effective distribution.”

In 2002, Central de Cervejas had total beer sales of 3.3 mhl and a domestic market share of approximately 40% of the growing Portuguese market. It is the market leader in Lisbon and the south of the country. Its leading brand, Sagres, sold 3.0 mhl in 2002, with considerable growth in exports.
In December 2000, S&N acquired a 49% stake in Central de Cervejas for €149 million and since then has enjoyed a successful partnership with local shareholders and management. Beer volumes have grown from 2.7 mhl in 1998 to 3.3 mhl in 2002 and net revenues from €192 million in 1998 to € 249m in 2002.


13 May, 2003