Oct. 17 (Bloomberg) -- Carlsberg A/S, the biggest Nordic brewer, teamed up with Heineken NV to make a hostile offer for Scottish & Newcastle Plc, the U.K. maker of Kronenbourg and Foster's lager.

Scottish & Newcastle shares surged 19 percent, valuing Britain's largest brewer at 7.2 billion pounds ($14.6 billion). Carlsberg would gain control of Baltic Beverages Holding AB, its Russian venture with the Edinburgh-based company, while Heineken would get the U.K. brands.

The approach is ``unsolicited and unwelcome,'' Scottish & Newcastle said. Baltic Beverages, which owns Russia's largest brewer, had 724 million pounds of sales last year and would increase Carlsberg's emerging-market earnings as western European growth slows. Larger rival SABMiller Plc agreed to combine its U.S. assets last week with Molson Coors Brewing Co. to cut costs and widen distribution.

``Carlsberg is desperate to get its hands on BBH and control over the biggest-growth part of its business, which has been half-owned,'' said Bruce Davidson of Blue Oar Securities in London, who has a ``sell'' rating on Scottish & Newcastle. ``The driving force is the need to get into emerging markets.''

Any offer is likely to be made in cash, and there's no certainty a bid will proceed, the companies said.

The British company's stock rose 12 percent in the 12 months before today, partly on speculation Valby, Denmark-based Carlsberg would bid. Amsterdam-based Heineken, Carlsberg and Scottish and Newcastle are the third-, fourth- and fifth-largest brewers headquartered in Europe, respectively.

Shares Soar

Marcel Hooijmaijers of Kepler Landsbanki in Amsterdam, said the offer could be more than 800 pence a share and Carlsberg may have to sell new stock. He said the offer may be worth as much as 10 billion pounds, including 1.9 billion pounds of debt, and Carlsberg may have to contribute 5.4 billion pounds to a bid.

Scottish & Newcastle shares advanced 119.5 pence to 756 pence, the biggest gain since at least 1988. Carlsberg shares climbed 1.7 percent to 770 kroner in Copenhagen, and Heineken stock was up 52 cents, or 1.1 percent, to 46.49 euros.

The U.K. brewer said it's ``confident in its future as an independent group'' and urged investors to take no action.

``I am surprised Scottish & Newcastle already rejected it,'' said Nikolaas Faes, an analyst at Exane BNP Paribas in London. ``The share price has come up from below 500 pence. Does the company want it to drop back to that level?''

China, India

The statement didn't specify who would get S&N's Asian assets in China and India. Carlsberg spokesman Jens Peter Skaarup wouldn't comment on those units or the British company's response today. Veronique Schyns, a spokeswoman for Heineken, also declined to comment. Sanford C. Bernstein said local venture partners may end up with the Asian assets.

BBH sales and profit are surging as a ninth straight year of Russian economic growth enables more people to buy higher- priced beer instead of vodka. Besides BBH, Carlsberg would get Scottish & Newcastle's French and Greek units.

Heineken would gain the assets elsewhere in Europe, and become the top brewer in the U.K., where Scottish & Newcastle has about 26 percent of the market.

``The big logic for Heineken is to use these businesses as a platform to expand the Heineken brand,'' said Trevor Stirling, an analyst at Sanford C. Bernstein in London. ``That being said, Heineken would be buying into very tough, low-growth markets.'' A bid at 800 pence a share would be ``optimistic unless one ascribes high value'' to the extra Heineken sales, he said.

InBev, Budweiser

In France, Heineken has a market share of 30.9 percent, while the Greek operations account for 82.1 percent of the local market, according to the Dutch brewer's annual report.

UBS AG and Deutsche Bank are advising Scottish & Newcastle, and Lehman Brothers Holdings Inc. and Credit Suisse Group are advising Carlsberg and Heineken.

The SAB-Molson U.S. merger, announced last week, is aimed at saving $500 million in costs and widening distribution. That deal has spurred speculation Anheuser-Busch Cos. may come under pressure to combine with larger rival InBev NV, uniting the world's two biggest brewers.

InBev shares rose as much as 4.5 percent in Brussels today. Today's announcement ``could accelerate things'' between InBev and Anheuser, said Patrick Casselman, who runs about 500 million euros ($710 million) at KBC Asset Management in Brussels, including InBev shares.

Counterbidders for Scottish & Newcastle may include Anheuser, analysts say. The maker of Budweiser ``would find the Russian exposure very attractive and would have some synergies'' in the U.K., Bernstein's Stirling said.

Earlier newspaper reports also named Guinness brewer Diageo Plc and SABMiller as possible suitors, though SAB Chief Financial Officer Malcolm Wyman has described western European beer markets as ``singularly unattractive.''

Anheuser-Busch Chief Financial Officer Randy Baker declined to comment on the brewer's plans.

To contact the reporters on this story: Amy Wilson in London at awilson23@bloomberg.net; Meera Bhatia in Oslo at mbhatia2@bloomberg.net

Last Updated: October 17, 2007 12:44 EDT