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. Last Updated: 07/27/2016

Carlsberg Gets BBH in $15Bln S&N Deal

LONDON -- Carlsberg and Heineken agreed to buy Scottish & Newcastle for £7.8 billion ($15.4 billion) after a three-month battle that hinged on control of the British brewer's fast-growing Russian assets.

Carlsberg and Heineken said Friday that they offered 800 pence per share in cash for Edinburgh-based S&N, the maker of Foster's beer and Strongbow cider. That is 26 percent more than the closing price on Oct. 16, the day before the largest Danish and Dutch brewers said they were considering an offer. Carlsberg is paying 54.5 percent of the total and Heineken the remainder.

The bidders raised their offer three times, driving their own shares lower on concern that they would overpay. S&N and Carlsberg co-own Baltic Beverages Holdings, whose earnings are expected to surge by one-third in two years on Russian demand for Baltika and Nevskoye beer. Carlsberg and Heineken will split the company, with the Danish brewer taking control of BBH and its Dutch counterpart getting S&N operations in Britain and India.

Carlsberg, which unveiled a $6 billion share sale to help pay for the deal, sank 4 percent in Copenhagen. It "probably paid a little bit too much," said Andy Lynch, who helps run about $10 billion at Schroders Investment Management in London.

Retail sales in Russia will climb by an average 22 percent annually through 2011 as disposable incomes increase, according to Renaissance Capital.

Heineken, which said Friday that it would save £120 million per year by buying S&N's British assets, declined 28 euro cents, or 0.7 percent, to 40 euros ($58.9) in Amsterdam. Carlsberg declined 23 Danish kroner to 535 ($105.70). They've tumbled about 13 percent and 30 percent respectively since unveiling their pursuit of S&N in October.

S&N, whose Kronenbourg beer is the market leader in France, rose 17 pence, or 2.2 percent, to 783 pence in London.

Carlsberg is gaining S&N's operations in France, Greece, Vietnam and China, as well as BBH. In addition to Britain, Heineken gets units in Ireland, Portugal, Finland, Belgium, the United States and India. S&N owns 37.5 percent of United Breweries, the owner of Kingfisher, India's largest beer brand.

Kronenbourg, which will be made by Carlsberg in France, will continue to be sold by Heineken in Britain under license, the Danish brewer said.

"This acquisition will make us the world's fastest-growing brewer," Carlsberg CEO Jorgen Buhl Rasmussen said in the statement. He said it was "too early" to discuss potential job cuts and brewery closures or the costs to integrate the S&N assets.

S&N on Friday won disclosure of forecasts for BBH, announcing the venture's earnings before interest and taxes will rise 34 percent to 990 million euros ($1.5 billion) by 2010. The Russian beer market is expected to grow 5 percent this year, falling to a 3 percent rate by 2010, it said.