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Brewer Scottish & Newcastle (S&N), which has agreed to an acquisition by rivals Heineken and Carlsberg, has swung to a 2007 loss after selling its French wholesale division.

The company, which has recommended the Heineken and Carlsberg consortium's £8 per-share bid to its shareholders, posted a loss of £105 million compared to a 2006 profit of £303 million.

The loss was driven by the disposal of French business C10, in addition to costs incurred from restructuring and fighting the initial takeover approach.

S&N said the UK beer market experienced the twin challenges of unprecedented poor summer weather and the smoking ban in pubs in 2007, declining 3.9 per cent - down 6.5 per cent in the on-trade and 0.1 per cent in the off-trade.

The smoking ban cost the company around £10 million for the year, S&N said, while the wet summer resulted in a drop in profit of £19 million compared to 2006.

But S&N said it increased its share of the beer market by 0.2 per cent to 26.2 per cent, holding its position in the on-trade and growing 0.6 per cent in the off-trade.

Foster's, Kronenbourg 1664, John Smith's and San Miguel each gained share of the beer market.

The cider market continues to grow strongly, according to S&N, with Strongbow gaining an extra two per cent market share and Bulmers Original achieving a 27.8 per cent share in the premium-packaged segment.

John Dunsmore, chief executive, said: "In the face of substantial challenges in terms of unprecedented bad summer weather, the UK smoking ban and the distraction of the consortium approach, it is very encouraging that S&N's outstanding portfolio of brands and leading market positions has still delivered revenue growth of 7.9 per cent and operating profit growth of 5.7 per cent."

The board said it would not be paying a final dividend in 2007 due to the takeover offer from Heineken and Carlsberg.