Bloomberg News

Heineken Falls on Possibility of Increased S&N Bid

January 15, 2008

Heineken NV (HEIA), the largest Dutch brewer, dropped 3.6 percent in Amsterdam trading after Reuters reported that the company and Carlsberg A/S (CARLA) plan to raise their joint bid for Scottish & Newcastle Plc to 800 pence a share this week.

The suitors may promise to pay S&N's forecast final dividend, Reuters reported in a story dated yesterday, citing unidentified people. Scottish & Newcastle on Jan. 10 rejected a 780 pence offer, which valued the brewer at 7.6 billion pounds ($14.9 billion). The Edinburgh-based company said at the time it would consider starting talks if a bid topped 800 pence.

That value would be a ``very pricey acquisition, especially for Heineken,'' Jan Meijer, an analyst at Theodoor Gilissen Bankiers NV, said by phone today. ``For Heineken, it's not a good deal in terms of short-term shareholder value creation, though it makes sense from a strategic point.''

Valby, Denmark-based Carlsberg wants control of its Russian venture Baltic Beverages Holding AB with the British brewer, while Heineken is after U.K. brands that include Kronenbourg.

Carlsberg is sticking to its 780 pence proposal, spokesman Jens Peter Skaarup said by phone, declining to comment further. Amsterdam-based Heineken also maintains its offer, said an outside spokesman who declined to be identified. Robert Ballantyne, a spokesman for Scottish & Newcastle, declined to comment.

`Financially Disciplined'

Heineken dropped 1.46 euros to 39.29 euros in Amsterdam. Carlsberg shares fell 15 kroner, or 2.5 percent, to 593 kroner in Copenhagen, while S&N declined 10 pence to 729.5 pence in London.

``Heineken will remain financially disciplined and will not increase its price much further,'' Karel Zoete, an analyst at Rabo Securities, wrote in a note today. ``Any further increase of the offer should be mostly at the expense of Carlsberg, as they seem to get a more attractive deal. For them the stakes are higher, while for Heineken it is not a must do deal.''

Carlsberg and Heineken must make a formal bid for S&N by Jan. 21 or withdraw their plan, according to U.K. takeover regulations.

To contact the reporter on this story: Meera Bhatia in Oslo at

To contact the editor responsible for this story: Keith Campbell at

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