17 Dec 2007

Scottish & Newcastle welcomes Put up or Shut up deadline

The Board of Scottish & Newcastle plc (“S&N” or the “Company”) welcomes today’s announcement by the Takeover Panel that it has imposed a deadline of 21 January 2008 for Carlsberg and Heineken (the “Consortium”) to launch a formal offer or withdraw. By then, the Consortium will have had three months to make a decision and S&N believes it is in the interests of the Company and its shareholders that this long period of uncertainty is brought to an end.

Consortium’s proposal is wholly inadequate

The Board rejected the Consortium’s proposed offer of 750p per S&N share because it substantially undervalues the unique strengths and market positions of S&N.  Nothing has happened since then to change the Board’s view that the Consortium’s proposal is wholly inadequate.

Carlsberg is attempting to acquire BBH on the cheap

The Board believes that Carlsberg has proposed its break-up bid with Heineken in order to circumvent the provisions of the BBH shareholders’ agreement and to acquire BBH on the cheap. 

Carlsberg has full access to BBH’s business plans but has used the confidentiality provisions of the shareholders’ agreement to prevent S&N’s shareholders from being properly informed about the anticipated growth of BBH.

The information which S&N has asked Carlsberg to release comprises the following elements of BBH’s three year business plan in local currencies for 2008 to 2010:

• projections of total beer market volume growth;
• projected beer market shares;
• selling price trends;
• operating margin trends; and
• forecast capital expenditure.

All of this information has been agreed between Carlsberg, S&N and BBH management. S&N does not consider that the release of any of this information would be commercially damaging to the business.

S&N’s arbitration case is strong

The Board has been advised that its arbitration case is strong. The arbitration tribunal has now been constituted and the Board is confident that Carlsberg’s breaches of the shareholders’ agreement will give S&N the opportunity to acquire Carlsberg’s shares in BBH. S&N expects to publish a summary of its claim in early January 2008. While the value at stake is considerable, S&N has been advised that the legal issues and supporting evidence to be assessed by the tribunal should be straightforward, and expects the arbitration to be decided by June 2008.

S&N believes that it can create substantial additional shareholder value from controlling BBH, through:

• the achievement of substantial consolidation synergies;
• the potential for a share price re-rating due to enhanced sales, earnings and cash flow growth and improved margins at group level; and
• the creation of an even more attractive portfolio enjoying substantial growth, in a consolidating sector.

Heineken is undervaluing S&N’s Western European business

The Board believes that the Consortium’s undervaluation of S&N does not solely relate to BBH, but also that Heineken is significantly undervaluing the high quality assets it is seeking to acquire. These include:

• S&N’s number one market position in the UK;
• its number one market position in India (one of the most exciting growth markets in the world);
• its strong position in both beer and water in the attractive Portuguese market;
• a portfolio of first class brands including Foster’s and Newcastle Brown Ale; and
• S&N’s position as the world’s leading cider producer, including the Strongbow and Bulmers brands.

S&N believes shareholders should recognise this as an opportunistic attempt by Heineken to secure a unique portfolio of assets below their full value. 

The Board strongly urges shareholders to take no action. The Board remains committed to maximising value for shareholders and is confident that it can deliver significantly more value than the Consortium’s proposal.

Sir Brian Stewart, Chairman of S&N, commented:

“The Consortium persists in its attempt to secure S&N’s unique portfolio of businesses on the cheap. We have made our position on the Consortium’s proposal very clear and it is now time for Carlsberg and Heineken to put forward an offer which properly values S&N or to move on.

“Our absolute priority is achieving the best possible value for shareholders. We have a strong case for material breach of the BBH shareholders’ agreement and we will vigorously pursue the substantial value creation opportunity which we believe this presents.”

For information, please contact:

As required by the Takeover Code, S&N confirms that this announcement is not being made with the agreement or approval of Carlsberg or Heineken.  For the avoidance of doubt, there can be no certainty that this approach will lead to an offer being made for S&N or as to the terms on which any offer might be made.

FIH Partners is advising S&N in regard to BBH.  UBS, Deutsche Bank and Rothschild are advising the Company on all financial matters.

Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if any person is, or becomes, "interested" (directly or indirectly) in 1% or more of any class of "relevant securities" of Scottish & Newcastle plc, all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction.  This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends.  If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Scottish & Newcastle plc, they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of Scottish & Newcastle plc by Carlsberg A/S or Heineken N.V. or Scottish & Newcastle plc, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.  A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities.  In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the Panel's website.  If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel.

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