UPDATE: S&N announces £20 million cost saving plan

Source: Food and Drink Digital

Date :20/11/2007 10:17:01

Scottish & Newcastle, which is currently fighting off a takeover attempt by Carlsberg and Heineken, has announced plans to make the company “leaner, tougher, faster”.

In a trading statement for the third quarter, the company said “nothing is sacred in pursuit of value maximisation”.

In light of this, S&N announced £20 million of cost savings including the sale of its French wholesale business and said that it was consulting with employees on the possible closure of its bottling plant at the Berkshire brewery.

John Dunsmore, chief executive of Scottish & Newcastle, said: “The value driven asset management approach to managing the business has proved its worth in the UK where S&N is the leader in one of the most competitive and valuable beer markets in the world - and where we have leveraged a 26 percent beer market share to grow our share of the UK major brewers profit pool from 46 percent to 60 percent in the last three years.

I believe that this entrepreneurial model can be extended to deliver further success in our other European markets. In addition, S&N's portfolio of brands is a unique selling proposition in world beer, and is also particularly well adapted to growing partnerships in developing markets.

Let there be no doubt: for the team at S&N, shareholder value maximisation is paramount. Nothing is sacred”. Mr Dunsmore also restated the company’s opposition to the Carlsberg and Heineken bid attempt.

Following on from a week where two firms have proposed an offer of 750 pence per share for S&N, whose brands include Foster's, Kronenbourg 1664 and Newcastle Brown Ale.

Last month, the consortium proposed an offer of 720 pence per share.

Successful bid

In a statement, the consortium said that its offer represented a premium of 41 percent to the company’s share price of 531 pence in March 2007.

``We have listened very well to shareholders of Scottish & Newcastle,'' Veronique Schyns, a spokeswoman for Heineken, said today by telephone. ``This represents the full value.''

If the bid is successful, Carlsberg and Heineken are successful in buying S&N their plan is to split the company up, with Heineken taking control of the brewer's main business in the UK and some other European markets, while Carlsberg would take over the operations in France and Greece.

The increased offer sent Scottish & Newcastle shares three percent higher to 766 pence in early trade.

November 19, 2007