• The Wall Street Journal, Thursday, October 18, 2007 11:30 AM

Heineken NV and Carlsberg AS have formed a consortium to bid for the United Kingdom's best-selling brewer, Scottish & Newcastle PLC, which calls the proposition "unsolicited and unwelcome." Coming a week after London's SABMiller PLC announced plans to combine its U.S. unit, Miller Brewing, with the U.S. division of Molson Coors Brewing, the announcements reflect the brewers intent to use increased market share to negotiate better deals for everything from commodities to advertising that could bolster profits.

Jean-Francois van Boxmeer, CEO of Netherlands-based Heineken, says that the beer industry today takes so much capital that it isn't worth the expense being in many of the world's markets unless your company is either the No. 1 or No. 2 player. He says the best deals are ones that beef up a brewer's share of an existing market, not ones where it expands into a virgin one.

Heineken and Carlsburg say they plan to divide up the assets of S&N, which has a market value of $14.5 billion. Heineken would take over S&N's U.K. brands and other European markets. Carlsberg would acquire full control of a joint venture it owns equally with S&N in Russia. Carlsberg also would acquire S&N's operations in France and Greece.

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