11th May 2015 11:31
LONDON (Alliance News) - UK antitrust regulator The Competition and Markets Authority Monday said that Greene King PLC's acquisition of Spirit Pub Co PLC will be referred for an in-depth phase II investigation unless acceptable undertakings are offered.
Greene King agreed to acquire Spirit Pub in a GBP773.6 million deal that values Spirit shares at 115 pence per share last November. Following completion of the deal, Spirit shareholders will own around 28.9% of the combined company, with Greene King shareholders owning the remaining 71.1%.
The CMA's initial investigation found that around 1,000 Spirit pubs overlap with a Greene King pub in a local area. It said that in the vast majority of those areas, it does not have any competition concerns given the many alternative pubs offering similar eating and drinking options.
However in a small number of areas, the CMA found that Greene King and Spirit's pubs were in close proximity and were key rivals as they did not face sufficient competition from other outlets, meaning that the loss of that competition may lead to an increase in prices or a deterioration in the quality of the offering.
The CMA found that the transaction gives rise to a "realistic prospect of a substantial lessening of competition in 16 local areas", it said.
The transaction will therefore be referred for an in-depth phase 2 investigation unless Greene King and Spirit "offer acceptable undertakings to address the CMA?s competition concerns in a clear-cut manner", it added.
Greene King runs around 1,900 pubs, restaurants and a small number of hotels in the UK including brands Farmhouse Inns and Hungry Horse. Spirit runs approximately 1,200 pubs in the UK including brands Fayre & Square and Chef & Brewer.
Shares in Greene King were trading down 1.1% at 808.00 pence midday Monday, while Spirit shares were trading down 1.3% at 111.40p.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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