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Greene King's takeover of Spirit Pub Co investigated by competition commission

Published:  12 May, 2015

The Competition commission is looking into Greene King's proposed takeover of The Spirit Pub Company.

It has confirmed it was launch an in-depth investigation unless acceptable undertakings are offered by the two company, citing a small number of areas where there is not sufficient competition from other outlets.

The move comes eight months after brewery and pub operator Greene King proposed taking over The Spirit Company's 1200-strong pub estate in a deal worth £773.6m.

Greene King currently runs around 1900 pubs, restaurants and hotels in the UK.

The Competition and Markets Authority initially flagged up around 1000 of Spirits pubs that are close to Greene King venues, however it argued there were around 16 areas where the pubs were is such close proximity that they were key rivals, with no competition from other players.

"The transaction gives rise to a realistic prospect of a substantial lessening of competition in 16 local areas," it said. However, it added that it did not have any competition concerns in the vast majority of other cases, given the many alternative pubs offering similar eating and drinking options.

In a statement, The Spirit Drinks Company, said both parties were confident that the proposals would enable the transaction to be approved by the Competitions and Markets Authority without a Phase 2 referral and that completion would occur by the end of H1. However, they agreed to extend the possible completion date by a month to the end 30th June to allow for further discussions.

Greene King said it was cooperating fully with the CMA and intended to offer "acceptable undertakings" to address the competition concerns.

Following the Greene King initial offer in October, cider and beer company C&C Group was also mulling a purchase of The Spirit Pub Company, but withdrew its preliminary offer in January.

Last month the Spirit Pub Company reported pretax profits of £3m in the first half of the year, up £1m on the previous year. EBITDA was £71m, up from £60m the previous year.