Boost for S&N as Carlsberg backs tribunal

THE battle for control of Scottish & Newcastle will take another twist this week when Carlsberg, its Danish suitor, is expected to concede the Edinburgh firm's case for taking the fight to a tribunal.

The Danes are believed to have appointed an arbitrator to the Swedish hearing into a dispute over who can be allowed to buy out the other in their booming Russian joint venture.

Ownership of Baltic Beverages Holding, based in St Petersburg, is central to Carlsberg and Heineken's £7.3bn bid approach for S&N.

S&N claims the offer has triggered a so-called "shotgun clause", allowing it to acquire Carlsberg's 50% stake in BBH, and is taking legal action. It has already appointed its own arbitrator.

Up to now Carlsberg has issued threats to sue the company but its move to appoint its own arbitrator - yet to be announced - will be regarded as an admission of the validity of S&N's action.

The hearing, which will be chaired by an appointee of the Stockholm Chamber of Commerce, could drag on for months.

Scotland on Sunday also understands that in September, before the bid launch, Sir Brian Stewart, the S&N chairman, wrote to his counterpart at Carlsberg, Povl Krogsgaard-Larsen, warning that his comments about taking greater ownership of Carlsberg joint ventures could damage businesses such as BBH.

It is further understood that Carlsberg's lawyers have sent what have been termed "gagging orders" to some senior staff at BBH, warning them not to make public disclosures about the business.

On Tuesday S&N's newly appointed chief executive, John Dunsmore, will make his first set-piece announcement when he is expected to outline how UK efficiencies will be used to remodel parts of the company's other businesses.

A trading statement is likely to show continuing sluggishness in the UK and France, and how it might be tackled. His predecessor, Tony Froggatt, offloaded the Champigneulles brewery in July and restructured the on-trade sales force.

It is understood Dunsmore is in final negotiations to sell S&N's troubled Elidis business to C10, an independent rival that in May signed a distribution deal with InBev. Some analysts say a deal could be announced as early as Tuesday.

Although the group has been discussing a sale of Elidis since spring, well before the joint approach from its rivals, S&N will be keen to show it is making progress in sorting out Brasseries Kronenbourg, its embattled French division.

Elidis distributes beer, soft drinks and other alcoholic beverages to cafés, hotels and restaurants from a network of about 60 depots. It loses £20m to £30m a year on turnover of about £500m. C10 is said to have secured a deal ahead of Distri-boissons, a rival distribution group.

One City analyst said: "Carlsberg and Heineken have encouraged them not to proceed with the disposal, but given the current stance that S&N seem to be taking with the consortium, I wouldn't anticipate they will take any notice whatsoever."