Times have changed for Scottish and Newcastle
When Melbourne-based brewer Elders IXL bid for Scottish and Newcastle in October 1988, the Scottish mafia circled its wagons and persuaded the Monopolies and Mergers Commission to scupper the deal.
The very idea that Scottish and Newcastle, the maker of ales such as McEwan’s, Younger’s, Courage and Newcastle Brown, should be allowed to fall into the hands of an upstart Aussie brewer seemed to be anathema at the time (and jobs were also at stake).
Similar arguments were used six years earlier, when the same tartan mafia helped ensure that the Royal Bank of Scotland did not fall into the clutches of either Standard Chartered or HSBC.
But things have moved on since the Margaret Thatcher years.
Nowadays, when a large Scottish company succumbs to an overseas takeover, or is in danger of being taken over, there is barely a whimper from the Scottish populace. And the “great and the good” — if they still exist — would not dream of schlepping to London or Brussels to argue that such deals would be anti-competitive. For a start their arguments might be seen through.
There may however be a bit of tub-thumping from the likes of Nicola Sturgeon and the Scottish National Party, who would invariably be told to stop being such retrograde protectionists by New Labour.
This was the model when Scottish Power fell into the hands of Bilbao-based Iberdrola a few months ago and the same indifference looks likely to be repeated with Scottish and Newcastle.
Over the past 10 days the brewer’s shares have done anything but droop. On March 28, they surged by 12% as speculation about Scottish and Newcastle swept through the Square Mile. First Heineken was named as a bidder. Then it was Carlsberg, SABMiller, Diageo and even those pesky private equity guys (the share ramper’s best friends?) were supposed to be eyeing a takeover.
The excitement in the City was matched by a deathly hush from Scottish and Newcastle’s posh new headquarters on St Andrew Square (which incidentally are the former home of Scottish Equitable, which also succumbed to takeover by the Dutch), suggesting no bid had been received. Then last Thursday the brokers ING and Dresdner Kleinwort took some wind out of S&N’s sails by issuing “sell” notes.
However I would wager that some time before the year is out, Scottish and Newcastle will have received a formal £7 billion offer.
If the brewery giant originally founded by William Younger in 1749 is to be subsumed into a much larger global brewing group, it would in my view be a shame. Instead of being the hub of a global brewing empire, Scottish and Newcastle’s St Andrew Square headquarters would just become a spoke in someone else’s — Mr Heineken’s perhaps — and there would therefore be fewer opportunities for interesting work and a sharp reduction in workload for corporate lawyers, accountants, and ad men in the capital.
What surprises me is that so few Scots seem to care. If the abusive comments on this topic on one newspaper’s website is anything to go by, it seems few Scots give a damn who owns Scottish and Newcastle.
Scottish and Newcastle has been transformed from a dominant national player, a company close to local publicans and customers, into a global player. In the process the company has arguably turned its back on its roots. Pubs and hotel chains have been spun off, once-loved Scottish ale brands have been allowed to wither on the vine, and the Fountain Brewery sold off for development.
Maybe this is what lies behind the near universal shrug of the shoulders about the potential change of ownership. Once a company has become global (and has globalised by acquiring breweries and beer brands elsewhere in the world) to wrap it in the Saltire and say it should be inviolate might look absurd.
EU’s slow coach
There’s one area where the French still excel: trains. Last week an Alstom-made Train a Grand Vitesse clocked in at 574.8 kph (357mph), the fastest speed ever for a conventional train.
The feat has got some business leaders wondering about our own transport network. Ron Hewitt, the boss of Edinburgh Chamber of Commerce, says it reinforces his view that high-speed railways are the solution to Scotland’s transport needs.
“It would better connect us with the hothouse economy of the South-East of England. Our existing 89 miles of high speed railway in the UK, against the thousands of miles being created by our continental competitors, is shameful. Meanwhile we struggle to compete at a quarter the speed of our neighbours.” Does the UK really want to end up being the slow coach of Europe?
All doomed
Images of Dad’s Army sprang to mind when I read the latest Personal Assets Trust Quarterly by Robin Angus, the investor. Angus who co-manages the Personal Assets Trust with Ian Rushbrook, is predicting another stock market crash.
“It’s starting to feel that we’re into the “end game”,” he wrote. “The more credit expands, the greater the risk rises for investors.”
Angus and Rushbrook warn that, despite February’s market correction, equities remain 40% over-valued. Having liquidated some of the equity holdings in their £200m trust and increased the cash in its portfolio they have decided to “batten down the hatches and wait.”
As the pair sit it out in their St Colme Street bunker, they should at least have plentiful supplies of Cohiba cigars and Perrier-Jouet champagne to console them as we await financial Armageddon.
This Scottish Agenda column was published in The Sunday Times on 8 April 2007