Pub groups in bid battle for S&N

S&N, owners of Kronenbourg and Fosters among other brews, is expected to boost its drinks empire with proceeds from the sale

SPIRIT, THE PUBS GROUP backed by US private equity firms Blackstone and Texas Pacific, has offered £2.6 billion for Scottish & Newcastle’s pub estate.

The 1,400-strong holding has been up for auction for the past two months but this bid – £300m above City estimates of what the estate would fetch – puts Spirit in a powerful position.

However, Laurel, a pubs operator backed by Japanese banking group Nomura, has made a rival bid only £500,000 behind Spirit’s, and City observers warn the outcome of the auction could still "swing either way".

Another bid by venture capitalists CVC and Cinven is also being considered by S&N’s financial advisers, UBS and Deutsche Bank.  Furthermore, rumours have circulated that CVC, which owns a small stake in Spirit, might cut lose from Cinven and back the Spirit consortium.

S&N, owners of Kronenbourg and Fosters among other brews, is expected to boost its drinks empire with proceeds from the sale.  The group has already sold its leisure interests, including Center Parcs and Pontins holiday camps with the aim of increasing its drinks focus.

However, investors believe S&N could become the target for larger rivals such as Anheuser-Busch, Heineken, Interbrew or SABMiller. Nevertheless, Tony Froggatt, S&N’s new chief executive, is keen to expand the company, not fall prey to a predator.