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Daily Telegraph: S&N shareholders face CGT bill

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Scottish & Newcastle shareholders could face a CGT bill following the deal with Carlsberg and Heineken

Last Updated: 5:42pm GMT 19/02/2008

Thousands of private shareholders could get stung with a hefty CGT bill in light of the bid made last month by Carlsberg and Heineken for Scottish & Newcastle, writes Paul Farrow

Scottish & Newcastle, Britain’s largest brewer, whose brands include Foster’s and John Smith’s, is to be bought by Carlsberg and Heineken for £7.8bn – but as it stands S&N investors will only be offered cash for their shares.  

David Bennett, chief executive of the Association of Private Client Investment Managers & Stockbroker has fired off letters to S&N and to Carlsberg urging them to consider offering an option of loan notes to help shareholders mitigate any CGT liabilities that may arise as a result of the deal.

The letter said that it was “unfair that, as a result of company reorganisation, merger, or takeover, long-standing private investors face CGT bills where there has been no change of ownership in the underlying shares”.

The letter added: “A cash offer often can result in a significant CGT bill for many individual investors. In the interests of good investor relations, we would ask you to also offer a loan note option which would enable individuals to utilise more than one year’ s CGT allowance. This is a very significant issue for many investors and particularly those who have been shareholders for a long period of time.”

With a loan note the value of the shares would be rolled over into the loan note which will enable investors to drip sell stock over time using their CGT allowances and not be faced with an immediate CGT bill. Brewin Dolphin, the stockbroker said that more than 1,000 of its clients will have substantial CGT bills if a cash only offer is made.

Charlotte Black at Brewin Dolphin, said: “They will get a bill at a time not of their choosing and when they have also just lost indexation relief. While we think the offer for S&N makes compelling strategic rationale for Carlsberg and Heineken, we are concerned that only cash is being discussed. We are anxious that private investors should not be denied a loan note -many of them long term loyal shareholders, in Scotland and the North East in particular.”

This is not the first time that small shareholders have faced being snubbed in mega corporate deals. In 2005, hundreds of shareholders in Royal Dutch faced huge CGT bills as a result of the Shell merger. Shell eventually backed down by offering loan notes but the deal came too late for many who had already agreed to swap their old shares for equity in the unified company.

Meanwhile, S&N said profits remained unchanged at £444m but that there would be no dividend in light of the offer from Carlsberg. Black added: “We are disappointed that following S&N’s good results that no final dividend will be paid.” and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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