Greene King’s planned £774m purchase of rival Spirit Pub Company is poised to be approved after it offered options to dampen competition concerns.
To pave the way for the takeover – which would create the UK’s biggest managed pubs business – Greene King has offered to sell 16 pubs.
The proposal comes after the Competition and Markets Authority gave the pair until 18 May to offer “acceptable undertakings” to address its findings that the acquisition could lessen competition in 16 areas.
The CMA said: “There are reasonable grounds for believing that the undertakings offered by Greene King, or a modified version of them, might be accepted instead of a reference to a more detailed phase 2 merger investigation.”
Of the 16 pubs identified to be sold, nine are Greene King pubs and seven are Spirit. Ten are directly managed and six are tenanted or leased.
The CMA now has until 21 July to consider whether to accept the undertakings. Both Spirit and Greene King have separately confirmed their intention to complete the transaction by the end of the first half.
If the green light is given for the takeover, which was agreed last November, the companies would have a combined portfolio of more than 3,000 pubs and restaurants. Greene King’s brands include Old English Inns and Hungry Horse; Spirit’s include Chef & Brewer and Flaming Grill.
Rooney Anand, Greene King’s chief executive, said: “This is a great result. The CMA has confirmed that only a small number of pubs will have to be sold in order for us to complete the acquisition of Spirit, which means that both the profit impact and business disruption are minimised.”
Mr Anand added: “We believe this outcome is fair and sensible and ensures we can create the UK’s leading pub company and deliver significant financial benefits to both sets of shareholders.”
The update failed to set the City alight. Greene King shares fell 9p to 831.5p while Spirit was down 1.1p to 115.6p.