Scottish & Newcastle (S&N) rejected out of hand an indicative 720p-a-share offer from Carlsberg and Heineken yesterday, describing it as derisory.

Britain’s biggest brewer received at lunchtime its European rivals’ written proposal valuing it at £6.8 billion, or about £8.7 billion including debt. It took it just two hours to issue a formal rejection. The bidding consortium, which confirmed its interest in S&N last week, said that it felt its proposal to be “compelling for S&N shareholders”, and that it was disappointed by the British company’s refusal to discuss it.

Under the proposed break-up bid, which is subject to board and pension fund approval and limited due diligence, a new acquisition vehicle would be set up, owned 54 per cent by Carlsberg, of Denmark, and 46 per cent by Heineken, of the Netherlands.

The business would then be split, with the Danish brewer taking S&N’s 50 per cent stake in Baltic Beverages Holding and its operations in France, Greece and China. Its Dutch partner would assume its businesses in the UK and the Irish Republic, Portugal, Finland, Belgium, America and India.

Carlsberg, which is planning a £3 billion rights issue, has secured debt funding from Lehman Brothers, BNP Paribas, Danske Bank and Nordea Bank, while Heineken has a new debt facility from Credit Suisse.

The bidders claimed that the bid’s proposed level was “significantly in excess of the standalone independent value of S&N”, representing a 36 per cent multiple to the brewer’s 531p share price before speculation first surfaced at the end of March.

A spokesman for S&N said that the mooted 720p bid was only a small premium to the 640p at which its shares were trading before last week’s events and below the current price, which fell 4p to 758½p yesterday. He said: “Do they think it’s a Dutch auction where you look at the share price and then make a lower offer?”

Sir Brian Stewart, S&N’s chairman, said: “This unsolicited and derisory proposal is an effort to get S&N’s unique portfolio of businesses on the cheap.”

The spokesman said that the board had taken very little time to decide that the proposal should be rejected, and added: “Our answer was a Scottish form of ‘You cannot be serious’.”

One insider said that the bidders’ press release had included elements absent from its letter, adding: “The level of incompetence is breathtaking. There is a huge difference in culture between the transparency of a quoted UK company and the lack of transparency of what are effectively private European companies.

“That may be the way they do things in the boardrooms of Europe, but that’s not the way we do it in Edinburgh and London.”

Analysts said that the proposed 720p bid was disappointing and had no chance of succeeding. Matthew Webb, of Cazenove, said: “We have long argued that the appropriate value for S&N in a takeover scenario is 800p and we agree with the company that this offer falls well short. Nonetheless, we continue to believe an offer of circa 800p will be forthcoming.”

Anheuser-Busch, the American owner of Budweiser, fuelled hopes of a counterbid when its chief financial officer, Randolph Baker, said: “We continue to be interested in international beer deals to enhance growth.”

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