Scottish & Newcastle (S&N) has agreed a £1.2bn deal to buy Hartwell, Finland's leading drinks group which co-owns Russia's biggest beer business, Baltic Beverage Holdings (BBH).

Hartwell was founded in 1836, makes Finland's biggest-selling beer, Lapin Kulta, and owns 50 per cent of BBH with Carlsberg. Last year, the company's annual sales were almost £500m.

S&N, whose brands include Fosters, Kronenbourg and John Smiths, will issue 3.152 new shares for each Hartwell share.

Brian Stewart, chairman of S&N said: 'By adding the strong position of BBH to S&N's Western European platform, enhanced by the Finnish market position of Hartwell, we are creating a leading force across the whole of Europe from Siberia to the Atlantic.'

This latest acquisition comes after S&N recently announced plans to expand into India and invest in United Breweries.