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.

News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Romelu Lukaku puts pen to paper
sport
News
Robyn Lawley
people
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
PROMOTED VIDEO
News
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
News
people
Extras
indybest
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
Life and Style
Slim pickings: Spanx premium denim collection
fashionBillionaire founder of Spanx launches range of jeans that offers 'thigh-trimming construction'
News
Sabina Altynbekova has said she wants to be famous for playing volleyball, not her looks
people
News
i100
Life and Style
tech'World's first man-made leaves' could use photosynthesis to help astronauts breathe
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

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Java developer - Banking - London - Up to £600/day

£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star