Japan firms loom over S&N takeover

JAPANESE brewing groups Asahi and Kirin have emerged alongside a US-Belgian consortium of Anheuser-Busch and InBev as potential counter-bidders for Scottish & Newcastle.

The prospect of a bidding war could push the take-out price well above £8bn. Sources say Anheuser and InBev plan negotiations this week while the Edinburgh company has been in tentative talks with Asahi, a Tokyo-based group with sales of 1.45 trillion yen (£7bn). Kirin, which has ambitions to be twice as big, could also gatecrash an expected deal with Carlsberg and Heineken.

With US giant Anheuser-Busch, the brewer of Budweiser, touted as a buyer, the expectations of a done deal with the Danish-Dutch duo have been thrown into doubt.

Carlsberg and Heineken are now in talks with S&N after agreeing to raise their bid to 800p a share, valuing the Scottish company at £7.8bn. The price is the minimum demanded by S&N before it could consider a recommendation.

A new deadline for a firm offer has been set for Thursday and most observers now expect an agreement to be reached. But it will depend on Carlsberg agreeing to full transparency of financial information on Baltic Beverages Holding, its Russian joint venture with S&N.

Heineken will take control of the UK business – making it the country's biggest brewer – as well as western Europe and India, while Carlsberg will get S&N's interests in China, France and Russia. One source said Sir Brian Stewart, the S&N chairman, will insist Heineken retains the UK management offices of the company in Edinburgh's Gyle district.

Heineken will become top UK brewer. Should it agree to Stewart's demands, Edinburgh would retain a business worth £2bn, overseeing the UK beer operations. With S&N's shares closing at 765.5p, the markets did not seem to be expecting a higher offer and most analysts consider it a done deal.

But there is now talk of rivals waiting to pounce once they have seen Carlsberg-Heineken's terms and offer price. The access to information, particularly on BBH, will also be available to all interested parties.

One source said: "Anheuser-Busch in particular has no interests in Russia and these assets do not come on to the market very often."

The Japanese interest is also being taken seriously. "The Japanese brewers are huge and rich and they can see value," said one analyst.

Asahi has nine breweries in Japan, as well as production and sales agreements in a number of countries including China, Thailand and Canada, a collaboration agreement with Miller Brewing of the US and a stake in one of South Korea's leading brewers.

In 2005 the British brewer Shepherd Neame began production of Asahi Super Dry.

Kirin last year reorganised its operations and aims to take sales up to 3 trillion yen (£15bn) by 2015.