THE acquisition of 1,900 Punch Taverns pubs by Heineken is to be probed by competition authorities who are concerned the deal will be bad for consumers.
The planned £305 million acquisition, announced in December, would create the third largest pubs group in the UK, with almost 3,000 outlets.
The probe comes as Labour MSP Neil Bibby announced he will launch the Protect Our Pubs campaign and a consultation on his proposed Tied Pubs (Code and Adjudicator) (Scotland) Bill, which will examine the relationship between giant pub-owning companies and their tenants.
The Competition and Markets Authority (CMA) said it was assessing whether the Punch deal would lead to the “substantial lessening of competition” and has invited interested parties to comment in the first phase an investigation which could lead to a full 24 week probe.
Paul Waterson, chief executive of the Scottish Licensed Trade Association, has been a vocal critic of the deal. He said: “We are delighted that the CMA has chosen to listen to the concerns voiced by so many businesses, organisations and individuals within the pub and brewing industry and open an investigation into Heineken’s takeover bid for Punch Taverns.”
Heineken said in a statement: “This announcement confirms an important and fully expected stage in the process to finalise our acquisition of the Securitisation A pubs from Punch, and, Heineken will be fully cooperating with the CMA.”
In December Patron Capital Partners prevailed in a bidding war against Punch co-founder Alan McIntosh, who led the company to its flotation in 2002 before leaving to co-found private investment group Sun Capital Partners and then Emerald Investment Partners in 2012.
Patron, which incorporated Vine Acquisitions for the purposes of the deal, will pay £1.80 per share for Punch representing £405m. Vine will acquire 4,400 pubs and sell 1,900 of those to Heineken in a separate £305m deal, while retaining the rump of the Punch estate, along with the head office and services.
At the time the deal was announced, Heineken said it would work closely with the incoming licensees, helping refurbish and rejuvenate premises, “making them more relevant to their communities and capable of multiple income streams including food”.
Heineken first moved into the UK pubs market in 2008 when the Dutch giant acquired Scottish & Newcastle. Its Star Pubs & Bars pub division operates 1,050 unit in the UK, while Punch Taverns has 1,900 pubs, most of which are leased and tenanted.
Heineken estimates that it has invested around £20m per year in the estate since 2014.
On Wednesday Heineken unveiled 6.5 per cent growth in revenue in 2016, to €20.5 billion, with operating profit up 4.7 per cent to €2bn.
“Heineken is a global brewer, with very different priorities to their customers who often rely on hard earned local relationships to make their businesses work,” said Mr Waterson. “We know from both Heineken’s words and actions that they will give preference to their own products across their estate, and this is simply not fair for brewers, publicans or consumers. We look forward to receiving the findings of the investigation.”
If the deal is approved, Heineken would become the third largest pub operator in the UK, behind Greene King, whose estate is mostly managed, and Enterprise Inns.
Punch shareholders approved the deal last week. Shares closed down 1.4 per cent, last night.
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