Scottish & Newcastle (S&N) yesterday announced the closure of one of its breweries just months before the expected completion of its takeover by a continental consortium.

The company said it will close its Berkshire Brewery, situated on a prime 56-acre site near Reading, by 2010.

This will save the com- pany £13m a year, albeit with a one-off cost of £22m and another £15m bill to upgrade sites that will take on the work.

S&N said there was a problem with overcapacity in the UK brewing sector, and its Reading plant was producing six million hectolitres of Foster's and Kronenbourg 1664 each year, 20% below capacity.

The news came after the November announcement that the company is to close bottling facilities at the site and transfer three million hectolitres of production to Coors Brewers.

The remaining brewing and packaging work will be gradually moved to other S&N sites in Yorkshire, Manchester and Gateshead, Tyne and Wear.

S&N has said that it will try to find alternative jobs for the 362 people affected.

A spokeswoman said the company has no plans to cut any jobs in the "near future".

Group operations director Stephen Glancey said: "It is well documented that there is general overcapacity in the UK brewing sector and these proposals have been put in place to address this issue."

However, Iain MacLean, national officer of trade union Unite, said it is considering industrial action.

"Management have failed to provide the union with a rational business case for this closure. We believe that this decision was a pre-emptive strike by S&N management, to prevent the union from campaigning to persuade the new owner Heineken to end the outsourcing agreement with Coors."

Last month, the board of S&N agreed that the firm be bought by Danish brewer Carlsberg and Dutch counterpart Heineken for £7.8bn.

It said its Reading plans have been shared with the consortium.

S&N said in November that it could achieve £20m of annual cost savings. Heineken, which is to take over its UK operations if the takeover completes as expected in the second quarter of the year, reckons it can achieve £120m more.

S&N employs 650 people at its UK headquarters in Edinburgh and another 100 at its international base in the city. Their future is still uncertain although Heineken will require staff to run its British operations as it has little presence in the UK and has also indicated that it will retain employees who can offer expertise it requires.