Trade Resources Company News UK Competition Watchdog Approves Heineken's Takeover of Punch Taverns

UK Competition Watchdog Approves Heineken's Takeover of Punch Taverns

Tags: Heineken, brewing

The UK's Competition and Markets Authority (CMA) has given its approval for the takeover of Punch Taverns by Dutch brewing giant Heineken.

In June this year, the CMA raised the issue of affecting competition in 33 places in the UK, if Heineken takes over Punch Taverns and asked the companies to address the issue.

The CMA found that the two companies operated in several places, but particularly in those 33 areas, there will be no sufficient competition once the £403m merger takes place. The merger is expected to create the third largest group of pubs in the UK.

Back then, CMA stated that if Heineken does not reply or take action within the given time, it will deepen the investigation.

The main reason behind raising the issue was that once competition is removed or reduced, it can lead to a situation where both consumers and other competitors can find it harder to buy and operate, respectively.

In response, Heineken proposed to CMA that it will sell those pubs in the 33 locations to ensure that competition at those places will not be affected.

CMA in a statement said: “Before reaching a final decision, the CMA carefully assessed and consulted publicly on these proposed undertakings.

"The CMA is satisfied that its concerns have been addressed and has therefore decided that the merger will not be referred for an in-depth phase 2 investigation."

As per the original acquisition plan, Heineken would take over Punch Taverns which owns as many as 3200 pubs in the UK. With the new proposals in place, Heineken can now acquire about 1895 pubs, while private equity firm Patron will buy the remaining 1329 pubs from the Punch Taverns. The acquisition is expected to be closed by the end of this August.

According to the Financial Times, this is one of the deals that Heineken has made this year. This May, the company acquired the Brazilian beer business from Japanese brewer Kirin for $700m. In the same month, it agreed to buy the remaining stake in Lagunitas, a Californian craft brewer.

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