S&N battles for BBH

S&N has filed an arbitration claim in Stockholm on the grounds that Carlsberg has breached BBH’s shareholder agreement. The UK brewer has accused Carlsberg of misusing confidential information regarding the company and acting in a way that is damaging to the joint venture, notably by breaching its “duty of loyalty”, as well as circumventing their shotgun agreement. Carlsberg has rejected these claims and says its case is based on “flawed legal assumptions”.

If S&N’s claim is successful when the verdict is announced on 3 July, it will have the right to acquire Carlsberg’s share of the JV at “fair market value”. This would doubtless be an improvement on what would happen if the shotgun clause was triggered.
S&N has claimed that controlling BBH and integrating the Russian brewer into S&N would allow it to make cost savings of £100 million and would lead to “significant additional value for S&N shareholders in excess of the proposed consortium offer”. The brewer anticipates selling a minority stake (up to 25%) to a new investor. The acquisition would also make S&N more competitive, transforming it into “a business with one of the best growth profiles in the global beverage business”.
But some analysts are concerned about the way that John Dunsmore is handling the situation. Press reports indicate that the S&N CEO has already dismissed the possibility of accepting an improved bid from Carlsberg and Heineken, before it has been put on the table. He has been quoted saying: “A slightly higher bid is unlikely to be attractive.” But this could be against the interests of shareholders, who stand to gain from an increase in the original bid of 750 pence per share.

Fionnuala Synnott, 09/01/08