Competition watchdog to assess Heineken pub takeover
Campaigners say £400m purchase from Punch Taverns will reduce choice for customers
The UK competition watchdog will assess whether to do an in-depth investigation of Heineken’s planned takeover of pub company Punch Taverns, which campaigners and landlords say will reduce choice for customers and damage small brewers.
The Competition and Markets Authority said on Thursday it had opened its initial investigation, which it expects to complete by April 24, and will then decide how to proceed.
Heineken said the announcement, which did not have a major effect on shares in either company, was “an important and fully expected stage in the process to finalise our acquisition”.
The planned £400m cash deal was approved by Punch shareholders on Friday. The Dutch brewing company — the world’s second largest after Anheuser-Busch InBev — would acquire 1,900 of Punch’s 3,350 pubs and become the third largest pub company in the UK, after Greene King and Enterprise Inns.
The remaining Punch pubs will be bought by Heineken’s partner in the deal, Patron Capital, a property investment fund.
Heineken, which owns brands including John Smith’s bitter and Foster’s lager, said it will “work closely with the incoming licensees, helping them to realise increased potential from the pubs that they operate”.
But landlords and independent brewers are worried that the takeover will mean that they are forced to stock more Heineken beers.
“Heineken’s aggressive bid for market dominance via their multinational balance sheet is wholly offensive to the principles that underpin the unique Great British Pub,” said Chris Lindesay of The Punch Tenant Network, a group that represents Punch Taverns landlords across the UK.
The UK’s Campaign for Real Ale said: “We believe that customers are likely to not only experience reduced choice in the range of cask beer from small and regional breweries in pubs owned by Heineken but also in the wider market, as it becomes harder for new brewers to emerge and for existing brewers to increase the availability of their products.”
Heineken published its full-year results on Wednesday: its worldwide drinks sales were €21bn with beer sales up 3 per cent. Beer sales in the UK fell “slightly” but it said sales of “premium” products had double-digit growth.
Heineken has about a quarter of the UK beer market and owns 1,100 leased and tenanted pubs through its Star Pubs & Bars division.
It has had a UK presence since its takeover of the Scottish & Newcastle brewery in 2008 when, as part of the transaction, it inherited more than 900 leased pubs. In 2014, it bought the properties from Royal Bank of Scotland.
Punch is one of the UK’s six large “pubcos”. These sprang up after the 1980s, when the Thatcher government told the big six brewers they had to shed half their estate.
Companies such as Whitbread and Bass had before that controlled three of every four pubs, producing about three quarters of the UK’s beer.