S&N plans to scupper Carlsberg bid with release of £8bn valuation dossier

SCOTTISH & Newcastle hopes to scupper its unwanted suitors Carlsberg and Heineken within two weeks with a report which will show the Edinburgh company's value far in excess of any offer made so far.

An independent consultancy is understood to be working on a study which will hint at the value which S&N can extract from its Baltika joint venture with Carlsberg. That would raise S&N's prospective value above £8bn, compared with the £7.3bn offered in the latest approach from Carlsberg and Heineken.

That would put more pressure on the suitors before the January 21 'put up or shut up' deadline by which they must make a formal offer or walk away.

Lead bidder Carlsberg has come under pressure in Denmark because its falling share price will make it harder to raise the cash it needs to buy its 54% share of S&N. The situation has been eased by the pound's recent fall against the Danish currency, but not enough to make up for a 25% drop in Carlsberg's market value in recent months.

S&N chief executive John Dunsmore hopes more detailed financial analysis will encourage analysts to lift their valuations on the group's 50% share in BBH, maker of Baltika beer, to at least £4bn. That would imply S&N's shares are worth more than 800p, compared with Carlsberg's offer of 750p and a closing price of 729p on Friday.

Analysts have suggested that Carlsberg and Heineken would come up with an offer of around 770p per share for S&N before January 21. But such a modest increase would probably strengthen the board's resolve to hold out for more.

Dunsmore told employees before Christmas that he would be willing to talk to Carlsberg and Heineken if the European brewers came up with "a more sensible approach", admitting that a "thumping great offer" may lead to discussions.

Any bid approach would be complicated by a legal dispute between S&N and Carlsberg over whether the latter triggered a clause in their BBH joint venture agreement which would allow S&N to buy the whole of BBH. Sweden's arbitration court, which is ruling on the matter, last week said it would produce a judgment by July 3. Carlsberg claimed the date was only prospective and that the whole process could take months longer.

The BBH venture is considered particularly valuable because the market for beer in Russia is seen as having greater growth potential than that in western Europe, where S&N, Carlsberg and Heineken get the bulk of their sales at present.