Scottish & Newcastle's days as the UK's last independent brewer appear to be coming to an end after it entered talks yesterday with suitors Carlsberg and Heineken, which met the board's demands to increase their offer by £200m.

S&N chief executive John Dunsmore, who has only been in post since November, appears to have been successful in his strategy of brinkmanship after the consortium raised its offer to 800p a share, the level the Edinburgh-based brewer maintained was the minimum for talks to start, only days before a deadline imposed by the Takeover Panel.

The bid values S&N, the brewer of Foster's and Kronenbourg, at £7.8bn. This is around £1bn more than the worth of the Dutch-Danish consortium's offer of 720p a share in October, which S&N described at the time as "derisory and insulting". A bid of 750p a share was put on the table in November and increased again to 780p in January.

The Herald also understands that Carlsberg has agreed to give shareholders full information about the Baltic Beverage Holdings (BBH) joint venture it runs with S&N before they vote on a sale.

The value of BBH, which operates in the former Soviet Union states and has a large stake in fast-growing Russian brewer Baltika, has been a major item of contention throughout the battle. S&N wanted to publish full financial projections for the business but Carlsberg refused to waive confidentiality clauses in their contract.

Such was the animosity between the two sides that S&N took out a case at a Swedish tribunal to have Carlsberg ejected from the venture for breach of loyalty amid accusations that it had shared confidential information with Heineken.

As a result of the talks, the Takeover Panel has agreed to a three-day extension to the "put up or shut up" deadline of January 21 that had been imposed.

There is much to discuss including, it is thought, a demand by S&N that the Danish-Dutch consortium agrees to pay its final dividend, which is forecast at 15p a share and would have been announced on February 19.

An 800p-a-share cash bid would give a total value to S&N, including debt and pension liabilities, of around £10.2bn, and represents a 26% premium to S&N's share price the day before Carlsberg and Heineken formally announced their approach on October 17.

If the deal goes ahead it will see S&N's operations split between the continental companies. Heineken will take over the UK operations, where the brands include Strongbow cider and John Smith's beer, as well as those in other European markets such as Belgium and Portugal as well as its United States and Indian businesses. Carlsberg will have full control of BBH and S&N's interests in France, Greece and China.

In a statement to the stock exchange, the three parties said they had entered into discussions in relation to a possible recommended offer but the proposal is subject to preconditions, including "satisfactory completion of limited due diligence".

Carlsberg is funding the extra £200m hike on its own and is planning a rights issue to fund the deal. Despite starting the day strongly, news of the talks hit its shares and they closed the day down 4.68% to 570 crowns. Heineken shares actually gained on the day, rising 1.76% to e40.

S&N shares closed yesterday at 765p, a 39p, or 5.37%, gain on the day and 44% higher than the 531p at which shares were trading before takeover speculation started circulating in March.

Although a final deal has still to be hammered out, it looks as if yesterday's events are the culmination of a 20-year transformation of the firm.

In 1985 it was the fifth-largest brewer in the UK, focused on Scotland and the north-east of England. By 1995 it had gone to lead the UK market and in 2000 it expanded outside the UK by acquiring operations in western Europe.

Today it ranks as the world's sixth-largest brewer, just behind Carlsberg, with a market share of around 3.3% and employs around 1000 staff at its headquarters in Edinburgh.