S&N froths on talk of takeover

SCOTTISH & Newcastle, Britain's last independent brewer, is about to be on the receiving end of a bid priced at around 500p a share.

City sources say the offer, valuing S&N at £4.45bn, will land within days. Private equity firms are being tipped as possible bidders. Other names in the frame include US beer giant Anheuser-Busch, owner of Budweiser, or possibly South Africa's SABMiller.

Shares in S&N soared 24 1/2p to 413 1/2p on heavy turnover as the market buzzed with speculation, including rumours which were widely dismissed, that Diageo was running a rule over the group.

Drinks analysts described S&N as 'a sitting duck' and said any offer could spark a bidding war.

The struggling group is believed to be considering closing two of its five UK breweries, which include its operations in Newcastle upon Tyne and Edinburgh.

S&N, whose niche brand Newcastle Brown Ale is outsold by market leaders Kronenbourg and Foster's lager and John Smith's bitter, has been the worst performing stock in the Footsie.

It has been dragged down by supply chain difficulties and worries over its growth prospects. But it retains the number one position in the UK, France, Finland and Russia and is number two in Ukraine and Portugal.

S&N sold its pubs for £2.5bn to pay down debt and give it the firepower to make international acquisitions, which has made the group more attractive to international brewers.

New chief executive Tony Froggatt has been sorting out the bungled changes to the supply chain, as part of a drive to cut £45m costs a year and invest more in marketing its top brands.

One analyst said: 'Tony Froggatt has been setting up the business for a bid.' S&N's chairman Sir Brian Stewart has his hands full with solvency worries at insurer Standard Life, which he also chairs.