DTI set to give green light to Bass deal

Bass has persuaded the Government to wave through its proposed acquisition of Carlsberg-Tetley with far less onerous conditions attached than had been previously thought. Details of a deal which will catapult Bass into pole position in UK brewing are expected to emerge later this week or early next.

Bass yesterday confirmed the City's worst-kept secret, admitting that it was in negotiations with Allied Domecq to buy its half share in the brewing venture with Denmark's Carlsberg. It is expected to pay about pounds 200m to take Allied out of brewing and to offer Carlsberg a minority stake in its brewing arm in exchange for the Danish company's 50 per cent share.

Several factors are thought to have persuaded the President of the Board of Trade, Ian Lang, to look favourably on the proposed tie-up. Bass is understood to have given undertakings on brewery closures and market share, and to have persuaded the government that the deal could increase competition and strengthen the company's hand in overseas markets.

Analysts had expected at least one closure among the combined group's 14 breweries, in addition to the Carlsberg-Tetley site at Warrington which has already been earmarked for closure in October.

It emerged yesterday, however, that capacity constraints at Bass, which contracts out some of its current production to third-party brewers including Vaux, Greene King and Marstons because it cannot meet demand, could mean no more sites need to be shut.

Although the logic of the merger is still driven by cost-cutting in response to industry trends which have seen on-trade beer volumes fall rapidly in recent years, it is expected that the bulk of savings will come from shedding jobs in the combined group's distribution network and from better buying power in packaging, one of the largest variable costs in beer production.

Combining Bass with Carlsberg-Tetley will mean the group leapfrogs Scottish Courage to become the country's largest brewing group, but it is thought estimates of market share of up to 40 per cent are too high. Thanks to the acquisition by Whitbread of Labatt's UK brewing arm, the combined share after any deal might only be 35 per cent compared to Scottish's 31 per cent, possibly low enough to avoid a monopolies reference. Whitbread, the only other sizeable player and a strong competitor in the fast- growing take-home market, has just 14 per cent.

Other key elements in Bass's pitch to the competition authorities appear to include the extent to which an end to the supply agreement between Carlsberg-Tetley and Allied Domecq's 4,000 strong pub chain no later than the end of 1997 will actually create a more competitive market. Bass expects a sharp deterioration in the terms of any new contract with Allied's pubs, confirming its claim that there has been a power shift in the beer market from suppliers to purchasers.

Bass is also understood to have indicated that despite heavy duplication between the two portfolios, pitching Carlsberg lager against Carling Black Label and Special Brew against Tennent's Super, it is unlikely that any brands will be ditched immediately, although some may be sold if required by the OFT.

Finally, the company is thought to have demonstrated that creating a stable market at home would be conducive to an accelerated push by British brewers in overseas markets, such as China and Eastern Europe, where there is scope for considerable growth. Bass yesterday said it had taken a 20 per cent stake in Czech brewer Pivovar Radegast, one of the country's four largest brewers. It already holds 46 per cent in Prague Breweries and stakes in two smaller Czech brewers.

Speculation has focused on the pubs that Bass might need to dispose of as a quid pro quo for increasing its market share from its 24 per cent. Analysts have said the terms of the recent takeover by Scottish & Newcastle of Courage might mean Bass shedding up to 1,000 pubs, almost one-fifth of its estate.

Start your day with The Independent, sign up for daily news emails
Voices
Barn owls are among species that could be affected
charity appeal
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Sport
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas