The barroom brawl between U.K. brewer Scottish & Newcastle plc and its continental European rivals Carlsberg A/S and Heineken NV spilled over into the courts on Wednesday, when S&N formally announced the start of action against Carlsberg in the Stockholm Chamber of Commerce.
The court maneuver, which could support S&N in a possible bid for Carlsberg’s stake in their Swedish and Russian joint venture Baltic Beverages Holding AB, brought a chilly response from Carlsberg and Heineken. The two are proposing a joint takeover and subsequent breakup of the Edinburgh, Scotland, brewer’s whole business, valuing its stock at �6.81 billion ($14.05 billion). In a joint statement, they described the legal action over the Baltic business as a “legal distraction.”In his own frothy statement, Carlsberg CEO Jorgen Buhl Rasmussen said, “S&N’s legal claims are spurious, without merit and a distraction to advancing discussions on the 720 pence proposal the consortium made to S&N on Oct. 25.”Carlsberg argues that S&N’s claim in the tribunal had been brought only against its subsidiary, Pripps-Ringnes AB, rather than the parent company. It said it had taken legal advice from law firms Vinge in Sweden and Norton Rose LLP in London, said there was no foundation to S&N’s “misguided claims” and warned that arbitration actions in Sweden typically take 12 months. It said it reserved its position regarding a claim for material damages.S&N spokesman Robert Ballantyne would not comment except to question Rasmussen’s talk of discussions on the bid. “What discussions?” the spokesman rhetorically asked, adding that the ball was in the other’s court.But S&N’s action shows it is prepared to battle to keep itself independent, and its share price on Monday shows that its shareholders will expect a considerably higher offer from its Danish and Dutch stalkers before they would consider an offer. The share closed up 1.23 percent Wednesday, at 783 pence ($37.07), giving the brewer of Foster’s lager, Newcastle Brown Ale and Kronenbourg 1664 a market value of �7.4 billion ($15.39 billion).Carlsberg and Heineken plan to break up Scottish & Newcastle. Denmark’s Carlsberg would take full control of its Baltic Beverages joint venture with the U.K. company as well as Scottish & Newcastle’s operations in France and Greece, while Amsterdam-based Heineken would get its assets in the U.K. and elsewhere in Europe.S&N’s counterattack over BBH, whose own brew, Baltika, is the market leader in the Baltic states, Ukraine, Kazakhstan and Uzbekistan, looks to put Carlsberg on the defensive and undermine its alliance with Heineken.Scottish & Newcastle and Carlsberg have been partners in Baltic Beverages since 2002, but the U.K. group said on Oct. 24 that it was considering whether to buy Carlsberg’s share or find a new partner. According to press reports, under Baltic Beverages’ shootout clause, if one of the partners offered to buy the other’s stake, the holder can either sell or come back with a counteroffer at a higher price at which the original bidder would be obliged to sell.However, in their joint statement, Heineken and Carlsberg continued to make common cause. “Rather than pursuing this legal distraction,” they said, “the consortium urges the board of S&N to engage with the consortium with a view to progressing its proposal which is aimed at delivering certain cash value to S&N shareholders.”Carlsberg and the consortium have turned to Adrian Fisk and Henry Phillips of Lehman Brothers Inc. for financial advice. In addition, the consortium is advised by Bertrand Facon and Stuart Upcraft of Credit Suisse Group, who are also advisers to Heineken.S&N is advised by Rothschild and Danish bank FIH Partners A/S on the BBH case, while UBS and Deutsche Bank AG are advising on all other financial matters. Linklaters is providing legal advice.Copyright �2007 TDD, LLC. All rights reserved.
