E-Malt.com News article: Denmark: Carlsberg says S&N deal financing in place

Danish brewer Carlsberg said it had financing in place for its joint bid for Scottish and Newcastle (S&N), countering a report the deal had hit problems ahead of Thursday's deadline, according to Reuters, January 23.

A formal 7.8 billion pound ($15.26 billion) cash bid is now set to be announced on Thursday priced at 800 pence a S&N share aimed at splitting up Britain's largest and last remaining big independent brewer, said sources close to the deal.

"The financing is in place. We will keep our investment grade, and the Carlsberg Foundation will keep its minimum stake of 25 percent, as we have said all along," Carlsberg's head of communications Jens Peter Skaarup told Reuters.

"All options are open until tomorrow at midday," he said.

"When the due diligence is finished, the consortium will take the consequences and decide whether to launch a formal bid before the deadline," Skaarup said.

Carlsberg's comments came after the Financial Times reported that the deal was thought to have run into due diligence problems, and there was some concern about the financing of the deal by the Copenhagen-based brewer.

The report pushed S&N shares down 19-1/2 pence, or 2.6 percent, to a low of 726-1/2p before recovering on the reassurance from Carlsberg to trade off 1.1 percent at 737-1/2p by 1145 GMT in a London market down 2.1 percent.

Carlsberg and its partner Heineken (HEIN.AS: Quote, Profile, Research) raised their proposed offer to 800p a share for S&N last week, which finally brought the Edinburgh-based brewer into talks with the bidders.

The Danish-Dutch consortium has been given until 1200 GMT on Thursday, January 24, to come up with a formal offer in a timetable set by the UK Takeover Panel.

Cazenove analyst Matthew Webb said he believed all parties were committed to the deal and an agreement would be reached.

The concern over due diligence involves the split in profits in S&N's continental European region, with Carlsberg looking to take over S&N's operations in France and Greece, and Heineken S&N's businesses in Portugal, Finland and Belgium.

But the sources said that although this may require further talks between Carlsberg and Heineken over the split of costs involved in the deal, an agreement should be hammered out.

Last year, the charitable Carlsberg Foundation agreed to cut its stake in Carlsberg to 25 percent from its current 51 percent while still retaining a majority of the voting rights in order to help fund any takeover deals.

Carlsberg is planning to fund 55 percent of its deal by a 31 billion crown equity bridge loan to be repaid by a rights issue that analysts believe will double the number of Carlsberg shares and dilute the Foundation's stake to 25 percent.

Despite volatile world stock markets and a continued credit squeeze, analysts expect a financing package to be agreed and say that Carlsberg can probably delay its rights issue until late in 2008.

Heineken shares were down 3.2 percent at 37.42 euros, and Carlsberg unchanged at 548 crowns.


23 January, 2008