European brewing giants Carlsberg and Heineken admitted on Wednesday that they were planning a joint cash offer for S&N, which has been the subject of takeover rumours for years.
The bid, likely to be in the region of £9bn including debt, will involve Carlsberg taking sole control of BBH (its lucrative Russian joint venture with S&N) plus the brewer’s French and Greek operations, with Heineken taking the UK and other European brands (which include Foster’s and John Smith’s).
Putting BBH ‘in play’ could also draw out other potential bidders, including US group Anheuser-Busch and South African company SABMiller. SAB reportedly considered linking up with Diageo to launch a break-up bid for S&N earlier this year (although no offer was ever made), and recently ring-fenced its US assets into a joint venture with Coors, so it could concentrate on emerging market deals.
In some ways, it was only a matter of time before a bid emerged. S&N is too small to compete with the international giants of the brewing industry, but too big and diversified to operate as a niche or specialist outfit. And its stake in BBH was always going to prove a tantalising prospect for bigger rivals.
S&N clearly has no intention of going quietly - it reacted huffily to news of the prospective bid, calling it 'unsolicited and unwelcome'. Given the sizeable premium to the recent share price likely to be on offer, we're not convinced its shareholders will agree.
After Alliance Boots was sold to private equity earlier this year, and with Sainsbury’s seemingly about to follow suit, S&N could be the third big name FTSE 100 company this year to fall into foreign hands.
Here at MT, we’re all for free markets – but we can’t help wondering whether this would have been allowed to happen in any of the world’s other big economies. After all, if the French can claim yoghurt as a strategic national asset (as they did with Danone earlier this year), surely the Brits have a cast-iron case for beer?