( Reuters ) - Britain's last big independent brewer Scottish & Newcastle (S& N) is set to fall to rivals Carlsberg and Heineken after agreeing to talk about accepting a high price for one of world's few available big brewers.
Analysts said the takeover of S& N, which is expected to be finally agreed next week, will put the spotlight on other brewers such as Molson Coors and Foster's which have uncertain futures if the pace of takeovers quickens.
Carlsberg and Heineken are looking to pay a multiple of 14.3 times 2006 historic earnings for S& N, below the 14.7 times that SABMiller agreed late last year to pay for Dutch brewer Grolsch but well ahead of previous big brewing deals.
Earlier, S& N agreed to talk to the two bidders over an offer of 800p a share in cash to value Britain's biggest brewer at 7.8 billion pounds after rejecting three previous lower bids.
Analysts said SABMiller was paying a high price to plug the iconic Dutch beer into its global network, while Carlsberg and Heineken are buying a mix of S& N's fast-growing Russian operations and more mature UK and French beer markets.
In one of the last big brewing deal, SABMiller paid 10.6 times historic earnings in 2005 for Latin American Bavaria which operates in Colombia, Peru, Ecuador and Panama. This was a large $7.8 billion (4 billion pound) deal, but prices have since risen reflecting the scarcity value of brewing assets around the world.
"Carlsberg is paying top dollar for S& N but then Russian brewing asset of this type do not come up very often in the global beer market," said one industry analyst.
Under the proposed breakup plan with Heineken, Carlsberg would acquire S& N's 50 percent stake in Russia-based Baltic Beverages Holding BBH.L to give the Danish brewer full control of BBH which has a Russian market share of nearly 40 percent in the world's third largest beer market.
In the deal, Carlsberg would also gain S& N's brewing interests in France, Greece and China, while Heineken would take over S& N's British business and other European markets such as Belgium, Portugal as well as its United States and India units.
The deal would put an end to years of underperformance and slip ups at S& N, and leave control of the European beer market in the like of Carlsberg, Heineken and InBev, which all have controlling private shareholders, analysts said.
The move will put the focus on Molson Coors formed in 2005 from the merger of Canada's Molson and U.S. Coors, and the group is already looking to form a joint venture in the U.S. with SABMiller after years of struggling in the market against leader Anheuser-Busch, analysts said.
In addition, Foster's has an unclear future in beer after selling off most of its beer assets outside its domestic Australian market to focus on its growing wine interest.
The Edinburgh-based brewer of Foster's, John Smith's and Newcastle Brown Ale turned itself from a national brewer to a European powerhouse with its deals to buy France's Kronenbourg in 2002 and Finish Hartwall in 2002, which gave it entry to the lucrative and fast-growing Russian beer market.
In the following year, the brewer cut its last ties with owning pubs and appointed Australian Tony Froggatt as Chief Executive to integrate its recent acquisitions.
But the group found some banana skins in its way, a major supply chain rationalisation in the UK including the closure of its breweries in Edinburgh and Newcastle was botched and 60 million pound of cuts were only completed in 2007.
This prompted some commentators in the beer industry to call S& N the "ampersand" company as it had no fully-owned breweries in Scotland or in Newcastle.
Earlier in 2007, a plan to cut costs by a further 50 million pounds in western Europe was partially offset as it immediately said a smoking ban in English pubs and rising input costs would cost it some 30 million pounds.
A move to cut costs again by 20 million pounds in its major bid defence plan in November provoked protest from trade unions as the plan pointed towards the eventual closure of its biggest British brewery in Reading, southern England.
The group has also suffered in France from a declining beer market, but took time to slim down its operations to just one brewery outside Strasbourg and is still trying to sell-off its loss-making distribution business.
Although it is the French market leader with share of 35 percent with Kronenbourg, the group has been slow to exploit its international potential to offset tough domestic trading.