DTI approves Courage takeover

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The Independent Online
The Government has imposed only minor conditions on the takeover of Courage by Scottish & Newcastle, giving the green light to the creation of Britain's biggest brewer. Foster's, the Australian brewing group that owned Courage, will receive about pounds 550m from the deal.

The Department of Trade and Industry said that Jonathan Evans, Competition and Consumer Affairs Minister, had accepted undertakings from Scottish & Newcastle and Courage and decided not to refer the acquisition to the Monopolies and Mergers Commission. This was in line with advice from the Director General of Fair Trading.

The DTI said Scottish & Newcastle has agreed to reduce the number of tied pubs in its estate by 115 to 2,624 within a year of completing the merger. The new total will become a ceiling for the size of the brewer's estate for three years, after which it will be reviewed.

Scottish & Newcastle will be able to seek an earlier review if there is a material change in circumstances, according to the DTI statement. Scottish & Newcastle has also undertaken to release 1,000 Inntrepreneur Estates tied pubs from its agreement to receive supplies of beer from S&N. Some 500 must be released by January 1996, and another 500 by January 1997. These 1,000 pubs will remain tied to IEL, a joint venture of Courage and Grand Metropolitan, but will in future be supplied by a competitive tendering process from which Scottish & Newcastle and Courage will not be excluded.

The news was yesterday welcomed by Foster's Brewing Group, owner of the Courage brewing assets in the UK and Ireland. FBG president and chief executive, Ted Kunkel, said: "With the sale of Courage, we have achieved a very significant development for FBG's future. It is also, I believe, the most significant development in the UK and European brewing industry in the past decade or more."

He said the partnership created to manage the Foster's brand in the UK and Europe would propel its future growth and the Courage business and brands should prosper under S&N's stewardship.

"FBG can now pursue growth opportunities from the exceptionally solid base of a balance sheet gearing of about 23 per cent and strong sustainable cash flows from its operating businesses," Mr Kunkel said.