Heineken N.V. and Carlsberg A/S approach to Scottish & Newcastle plc
Amsterdam, 25 October 2007 - Heineken and Carlsberg (the
"Consortium") note the public announcement made by S&N today in
response to the Consortium's approach to the board of S&N.
The Consortium confirms that earlier today it submitted to the
Chairman of S&N a written proposal and requested a meeting to further
discuss a possible offer. The letter referred to the exclusive
agreement between Carlsberg and Heineken as well as setting out the
terms upon which it would be prepared to proceed with a cash offer at
a price of 720 pence per share for the entire issued and to be issued
ordinary share capital of S&N (the "Proposal").
The price of 720 pence per share set out in the Proposal represents a
compelling proposition for S&N shareholders:
- a multiple of 13.2x S&N's EV/EBITDA for the year ended 31
- a premium of 36% to the share price of 531 pence on 28
March 2007 (being the date immediately before speculation first arose
around a possible offer for S&N); and
- a value which is significantly in excess of the standalone
independent value of S&N.
Under the Proposal, the making of any offer would be subject to
certain pre-conditions, all of which are waivable at the discretion
of the Consortium, and all of which the Consortium believes to be
customary. These pre-conditions include satisfactory completion of
limited confirmatory due diligence, recommendation of the S&N board
and assurance from the trustees of S&N's UK pension schemes regarding
the level of contributions that Heineken would be expected to make
It has always been the strong preference of Carlsberg and Heineken to
approach the board of S&N in private to explain the Proposal in
detail in order to secure due diligence access and negotiate a
transaction on a recommended basis. Due to the increase in S&N's
share price on Wednesday 17 October, the Consortium was obliged under
the rules of the City Code on Takeovers and Mergers (the "Code") to
publicly confirm its interest in pursuing an offer for S&N.
Nevertheless, the Consortium wishes to confirm its desire to pursue a
transaction on a recommended basis.
The board of S&N has rejected the Proposal, has not granted the
Consortium its request for limited due diligence and refused to enter
into discussions. The Consortium strongly believes that its Proposal
is strategically compelling and that a recommended transaction is in
the best interests of S&N's shareholders.
Structure and financing
The Proposal contemplates the formation of a newly incorporated
company ("BidCo") to act as the offeror. BidCo will be jointly
managed by Carlsberg and Heineken as a 50/50 venture throughout the
offer period with the economic contributions by Carlsberg and
Heineken being approximately 54% and 46% respectively.
The Consortium intends that, following closing of any offer, 50% of
BBH, the French and Greek operations as well as the participation in
the Chinese business will be transferred to Carlsberg. Heineken
would hold the remaining businesses, principally the UK & Irish,
Portuguese, Finnish, Belgian and US operations as well as the
participation in the Indian business.
The Consortium has undertaken a detailed analysis of potential
anti-trust issues in all jurisdictions where S&N operates. Whilst
the Consortium will co-operate fully with all necessary regulatory
processes, based on public information the Consortium is confident
that the proposed transaction structure will avoid any substantive
Carlsberg and Heineken have secured separate committed financing
arrangements for the provision to BidCo of the necessary financing to
effect the offer.
Carlsberg has secured committed new debt facilities underwritten by
Lehman Commercial Paper Inc. - UK Branch, BNP Paribas, Danske Bank
A/S and Nordea Bank AB (publ) to fund its contribution to BidCo.
Approximately DKK31 billion of the new debt facilities comprise an
equity bridge loan to a rights issue. The funding has been structured
to ensure Carlsberg's debt facilities remain investment grade.
Heineken's financing will be provided through a committed new
facility, which is being provided by Credit Suisse, as well as
existing loan facilities.
This announcement does not constitute an announcement of a firm
intention to make an offer under Rule 2.5 of the Code. There can be
no certainty that any offer will be made even if the pre-conditions
referred to above are satisfied or waived.
Tel: +31 (0)20 52 39 355
Investor and analyst enquiries
Jan van de Merbel
Tel: +31 (0)20 52 39 590
Financial adviser and Corporate Broker to the Consortium and to
James Leigh Pemberton (Corporate Broking)
Tel: +44 20 7888 8888
Sources and bases:
* Closing prices and exchange rates are sourced from
* S&N's 2006 EV/EBITDA multiple is based on an
enterprise value calculated as:
a. the equity value based on an offer price of 720 pence per
share and fully diluted share capital of 974.2 million comprising
946.2 million shares in issue as stated in S&N's rule 2.10
announcement released on 18 October 2007 and 28m options as at 31
December 2006 sourced from S&N's 2006 annual report; plus
b. the sum of (i) S&N's financial net debt as at 31 December
2006 of £1,912 million sourced from S&N's 2006 annual report, (ii)
£221 million being 50% of BBH net debt as at 31 December 2006,
sourced from S&N's 2006 preliminary results presentation and
converted into sterling at the euro sterling exchange rate of 0.6738
as at 31 December 2006 sourced from Factset, (iii) net pension
deficit of £280 million sourced from S&N's 2006 annual report, (iv)
less £73 million being the proceeds from options and cash proceeds
from shares held in trusts as per S&N's 2006 annual report, and (v)
book value of minority interests in joint ventures of £77 million and
book value of minority interests in associates of £1 million sourced
from S&N's 2006 annual report.
- S&N's 2006 EBITDA of £715 million is sourced from S&N's 2006 annual
Lehman Brothers Europe Limited, which is authorised and regulated in
the United Kingdom by the Financial Services Authority, is acting
exclusively as financial adviser and corporate broker to the
Consortium and Carlsberg and no one else in connection with the
possible offer referred to in this announcement and will not be
responsible to anyone other than the Consortium and Carlsberg for
providing the protections afforded to clients of Lehman Brothers
Europe Limited nor for providing advice in relation to this
announcement or any matter referred to herein.
Credit Suisse, which is authorised and regulated by the Financial
Services Authority, is acting exclusively for the Consortium and
Heineken and no one else in connection with the possible offer and
will not be responsible to anyone other than the Consortium and
Heineken for providing the protections afforded to clients of Credit
Suisse nor for providing advice in relation to this announcement or
any matter referred to herein.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Takeover Code (the "Code"),
if any person is, or becomes, "interested" (directly or indirectly)
in 1% or more of any class of "relevant securities" of S&N, all
"dealings" in any "relevant securities" of that company (including by
means of an option in respect of, or a derivative referenced to, any
such "relevant securities") must be publicly disclosed by no later
than 3.30 pm (London time) on the London business day following the
date of the relevant transaction. This requirement will continue
until the date on which the offer becomes, or is declared,
unconditional as to acceptances, lapses or is otherwise withdrawn or
on which the "offer period" otherwise ends. If two or more persons
act together pursuant to an agreement or understanding, whether
formal or informal, to acquire an "interest" in "relevant securities"
of S&N, they will be deemed to be a single person for the purpose of
Under the provisions of Rule 8.1 of the Code, all "dealings" in
"relevant securities" of S&N by Carlsberg or Heineken or S&N, or by
any of their respective "associates", must be disclosed by no later
than 12.00 noon (London time) on the London business day following
the date of the relevant transaction.
A disclosure table, giving details of the companies in whose
"relevant securities" "dealings" should be disclosed, and the number
of such securities in issue, can be found on the Takeover Panel's
website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long
economic exposure, whether conditional or absolute, to changes in the
price of securities. In particular, a person will be treated as
having an "interest" by virtue of the ownership or control of
securities, or by virtue of any option in respect of, or derivative
referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be
found on the Panel's website. If you are in any doubt as to whether
or not you are required to disclose a "dealing" under Rule 8, you
should consult the Panel.
This announcement is not intended to and does not constitute or form
part of an offer or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote or approval in any jurisdiction.