Greene King plan to jump through CMA hoop to close Spirit deal

Greene King’s £725m purchase of Spirit Pub Company is on course for an end of June completion, despite a decision by the Competition and Markets Authority (CMA) to refer the deal for further investigation. The CMA has a few concerns which Greene King has said it will fully cooperate with.

The company has until 18th May to come up with a solution to the main area of concern which is that there are a few Spirit pubs, out of the 1,000 which overlap, where “the parties’ pubs were in close proximity, were each other’s key rivals and did not face sufficient competition from other outlets”. This said the CMA could mean that in 16 local areas “that the loss of that competition may lead to an increase in prices or a deterioration in the quality of the offering.”

Greene King, in a statement revealed it is “cooperating fully with the CMA and intends to offer acceptable undertakings in order to address the CMA’s competition concerns.”

The CMA will have until 26 May 2015 to whether Greene Kings solution, or a modified version of them, might be accepted by the CMA under the Enterprise Act 2002. If the CMA is minded to accept the proposed undertakings, which they say must be “clear cut”, a period of consultation would follow before the formal decision by the CMA on whether to accept the undertakings in lieu of a phase 2 investigation.

If all goes according to plan Greene King and Spirit have agreed, with the consent of the Panel, to extend the Long Stop Date for completion of the Acquisition from 31 May 2015 to 30 June 2015.

Rooney Anand, Greene King chief executive officer said, “This is a sensible decision by the CMA, reflecting a small number of local areas where competition may be diminished as a result of our acquisition of Spirit. We are confident we will be able to offer suitable undertakings, which will keep the number of pubs we need to sell to a minimum and allow the acquisition to complete before the end of June.”

It has been suggested that the most acceptable outcome would be to sell some pubs to new competitors.

Category: News
Tags: Greene King CMA, June, pubs, Rooney Anand, Spirit Pub Co