News

Heineken’s Punch Taverns takeover to be assessed by competition watchdog

Britain’s competition watchdog is to scrutinise brewing giant Heineken’s planned £305m acquisition of 1,900 pubs from Punch Taverns, a deal that will make it the UK’s third-largest pubs group.

The Competition and Markets Authority said it would assess whether the Heineken deal could reduce competition and choice for customers.

If the CMA finds that the deal could reduce competition,it would launch an in-depth merger investigation, which could last up to 24 weeks, unless the two companies address any competition concerns.

Heineken entered the UK pub market in 2008 when it took over Scottish and Newcastle. It is the world’s second-biggest brewer behind the Budweiser maker Anheuser-Busch InBev, which took over SABMiller in a £79bn deal last year.

Heineken’s beer and cider brands include Amstel, Foster’s, Birra Moretti, Kronenbourg 1664, Sagres, Bulmers and Strongbow.

The Dutch firm faces a backlash from pub landlords in the UK, who fear they may be forced to stock their pubs with Heineken beer, reducing choice for customers.

Heineken has dismissed those fears, saying publicans will still have a say over which beers they sell and has pledged to work with independent brewers.

The UK boss of Heineken has described the deal as a “huge vote of confidence in the ‘Great British pub’”.

The brewer’s chief executive, Jean-François Van Boxmeer, reiterated those comments on Wednesday, when he announced a near 10% rise in operating profits to €3.54bn, with beer sales up 3%. However, pre-tax profits fell 15% to €2.4bn due to currency movements and one-off costs.

The Punch Tenant Network, which represents the company’s publicans, has appealed to the Pubs Code Adjudicator, Paul Newby, to give guidance on the deal – specifically whether it would trigger the Pubs Code, which offers a market-rent only option. This would allow Punch’s pub landlords to cut supply ties with Heineken.

The Dutch brewer and the investment firm Patron Capital won a battle to take over Punch Taverns in December. Punch operates more than 3,000 pubs across the UK. Heineken plans to buy 1,900; Patron will take the rest.

Comments are closed.