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Carlsberg has hit back at claims from fellow brewer Scottish & Newcastle (S&N) that it breached the agreement over their joint venture in the Baltics.

The Danish brewer's denial of the claim marks the latest stage in a growing row between the two companies over the future of their operations.

Yesterday Edinburgh-based company S&N claimed that Carlsberg had breached the terms of an agreement governing their jointly-owned Russian beer business Baltic Beverages Holding (BBH).

But in a statement released on the stock exchange today Carlsberg stressed its belief that the claims made "have no merit".

Analysts have said that S&N's action is likely to stem from a desire by the company to thwart a potential joint takeover bid for its operations which is currently being considered by Carlsberg and Dutch firm Heineken.

The two brewers announced last week that they were considering the formation of a consortium to make an offer for S&N, whose brands include Fosters, Kronenbourg 1664 and John Smith's.

It was also revealed that the companies were considering proposals for Carlsberg to acquire S&N's interest in BBH as part of a potential bid, along with S&N's operations in France and Greece.

Meanwhile Heineken would assume control of S&N's businesses in the UK and other European markets.

But S&N reacted angrily to the statement by Carlsberg and Heineken, stating that the proposed break-up of its business was "unsolicited and unwelcome".

After accusing Carlsberg of breaking the terms of their joint venture agreement over BBH, S&N yesterday indicated that it was considering whether to assume full ownership of the Russian beer business.

"The board is still evaluating whether the best interests of S&N shareholders will ultimately be served by outright ownership of BBH or through the introduction of a new partner(s) into BBH," S&N stressed.