Scottish & Newcastle yesterday relinquished its status as Britain's last large independent brewer after its board agreed to a takeover by Heineken and Carlsberg.

Scottish & Newcastle yesterday relinquished its status as Britain's last large independent brewer after its board agreed to a takeover by Heineken and Carlsberg.

The continental consortium is to pay 800p a share, totalling £7.8bn, for the Edinburgh-based firm, with Heineken taking over its UK business.

Heineken yesterday made positive noises about the future of the 650 staff at S&N's UK headquarters. Its chief executive, Jean-Francois van Boxmeer, said the deal was "delivering people - people with expertise I do not have in the Heineken group".

But things are less certain for the 100 people employed at its global headquarters in the city, as Heineken has pledged to centralise operations in the Netherlands after promising shareholders it would find £120m of cost savings, although many analysts think it could achieve more.

S&N is Scotland's fourth- largest listed firm and, after utilities company Scottish & Southern, its second largest manufacturer. Its disappearance, and with it at least some high-quality, well-paid jobs, would be a blow to Edinburgh's status as a major business centre. It could have a knock-on impact on legal, accountancy and merchant banking firms in the capital which benefit from contracts with S&N.

The deal could be completed in as few as 90 days, Heineken said yesterday, as S&N's directors and its largest shareholder Hartwall Capital, which has a 9.2% stake, promised to vote in its favour.

However, Hartwall has reserved the right to change its mind should another bidder offer more than 850p a share. Although it is possible that another suitor may appear, especially after Carlsberg agreed to publish additional financial information about the fast-growing Baltic Beverage Holdings (BBH) joint venture it runs with S&N in the former Soviet republics, S&N is liable to pay a break fee of 1% if it pulls out of the agreement.

Under the terms of the purchase, Heineken and Carlsberg have formed a bid vehicle called Sunrise Acquisitions, which will buy S&N and later divide it between the two companies, with Carlsberg shouldering 56% of the costs.

Under the plan, S&N's operation in the UK, which employs 3300 staff, will form the largest single operating firm in the Heineken group.

Van Boxmeer said: "It is a very special business. It is a market leader both in beer and in cider."

By taking on S&N's UK business, which has brands such as Newcastle Brown Ale, John Smith's and Foster's, Heineken's market share in the UK will rise from less than 1% to almost 30%.

As S&N's UK and Irish businesses include five breweries and a cider mill, it also marks Heineken's return to brewing in Britain. It sold its former operations to Whitbread in 2001.

In particular Heineken will gain access to the growing cider market through S&N brands such as Strongbow and Bulmer's, and Van Boxmeer indicated yesterday that he would seek to expand the exports of these products. The UK cider market is also attractive, growing at 20% a year.

Heineken will retain the right to produce Kronenbourg in the UK under licence and will pick up S&N busi- nesses in Ireland, Finland, Portugal, Belgium, the United States and its 37.5% stake in Indian-based Kingfisher lager producer United Breweries.

Van Boxmeer is also enthusiastic about S&N's 2000-strong portfolio of managed pubs in the UK and indicated he would like to export this model elsewhere.

Heineken reckons it can achieve savings of £120m a year through the deal, mostly from cost cutting. This is on top of £20m of savings S&N has already said it is pursuing.

Van Boxmeer said much of this would be achieved through reducing "central overheads" and that group operations would be integrated into Heineken.

But he added: "You shouldn't make assumptions about the scale of likely job cuts in the UK and you shouldn't assume that the group HQ of Scottish & Newcastle will be shut down. It is not a mathematical exercise where you find a headquarters and shut it down."

Iain MacLean, national officer of trade union Unite, said: "We have a meeting with Scottish & Newcastle next week and we will be looking for Carlsberg-Heineken to guarantee the security of our members' jobs."

Members of the firm's final salary pension scheme were also told that Heineken would accelerate the payments being made by S&N to tackle its deficit, with an immediate cash injection of £50m.

Carlsberg chief executive Jorgen Buhl Rasmussen was bullish about his company's part of the deal, which will see it take full control of the Baltic Beverage Holdings joint venture it ran with S&N in the former Soviet republics as well as its Chinese and Vietnamese operations and S&N's French and Greek businesses.

He said the deal would make Carlsberg "the fastest-growing brewer in the world", with the bulk of its revenues from emerging markets.

If the deal, which requires the backing of shareholders from all three companies as well as regulatory approval, is confirmed, 61% of Carlsberg's beer volumes will be from eastern Europe and Asia and 46% of its earnings will come from these regions, although it expects this to rise to 65% by 2010.

A case that S&N took out at a Swedish tribunal in the midst of the takeover battle to have Carlsberg ejected from BBH will continue, albeit behind closed doors.

"We now have full control of our destiny in Russia and other BBH territories and I am truly excited about the new opportunities this will present to us," Rasmussen said.

The deal also hands Carlsberg a stake in Chongqing Beer Company in central China's Sichuan province, adjacent to more westerly provinces where Carlsberg already has a strong presence.

Carlsberg reckons it can get annual cost savings of £126m out of the transaction.

Much of Carlsberg's part of the purchase costs will be funded via a share issue, while Heineken is upping its long-term debt The deal marks the end of a 250-year history at S&N.