Scottish & Newcastle expands

Deal with Danone makes S&N 2nd largest brewer in Europe

Mar 20, 2000 - Scottish & Newcastle has struck a deal with French food maker Danone that will make S&N the second largest brewer in Western Europe, behind only Heineken.


Scottish & Newcastle will pay Danone 5 billion French francs ($740 million) for control of its brewing assets in France (Brasseries Kronenbourg), Belgium (Alken Maes) and Italy (24% of Birra Peroni Spa).

Officially, the two companies are combining their brewing interest, but S&N will have management control. Danone must decide by May 2003 whether to exit the partnership for 13 billion francs or keep a 25% stake.

S&N's company's own brands and licensed brands include Foster's Lager, John Smith's, Newcastle Brown Ale, McEwan's, Miller, Beck's and Kronenbourg.

With profit rising faster from brewing than pubs, S&N is looking for more beer brands while focusing its bar holdings on higher-margin brand name chains. The deal will allow Danone to expand in bottled water, dairy products and cookies.

Danone chose Scottish & Newcastle over Belgium's Interbrew. Interbrew officials said only that offering more than they did wouldn't have met its standards for shareholder value.

The move comes as the European beer market consolidates. Bass, which brews one in four pints in Britain and owns many popular brands, has announced it will sell its brewing interest to focus on its more profitable pubs and international hotels.

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