OFT set to deliver report on Bass deal to Lang

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The Independent Online
Ian Lang, President of the Board of Trade, is due to receive the Office of Fair Trading's long-awaited report on the pounds 200m takeover of Carlsberg- Tetley by Bass tomorrow.

The OFT is expected to call for the merger to be referred to the Monopolies and Mergers Commission on the grounds that it would give Bass 38 per cent of the brewing market.

The merger would also create a group with more than 4,000 pubs controlling four of Britain's top 10 beers, making it Britain's biggest brewing group.

The deal might still escape an MMC referral if Bass gives undertakings to dispose of pubs, breweries and perhaps brands. The takeover of Courage by Scottish & Newcastle, a deal which gave it 31 per cent of the market, was cleared with only minor concessions.

However, Mr Lang's recent decisions to block several takeovers in other industries, including two bids for South West Water from rival water companies, has heightened speculation that the Bass/Carlsberg-Tetley deal may also be blocked.

There is also speculation in political and City circles that Mr Lang may choose to refer two US bids for regional electricity companies to the MMC.

The Bass/Carlsberg-Tetley takeover was finally unveiled in August after months of talks between the two sides.

Under the merger, Bass will acquire Allied Domecq's half- share in Carlsberg- Tetley for pounds 200m.

The Danish brewer Carlsberg would then inject its half of the business into Bass Brewers along with pounds 20m in cash in return for a 20 per cent stake in the enlarged group.

Bass has 4,000 pubs. In addition to that, it would continue to supply the Allied estate, which also consists of 4,000 pubs, giving it control of 70 per cent of all the beer and lager drunk in Britain.

Among the lager brands it would control are Carling Black Label, Tennents Extra and Castlemaine XXXX.

If the deal is blocked, then Carlsberg has undertaken to buy Allied's half-stake for pounds 110m. Allied would also pay Bass pounds 30m in compensation.

There was some surprise that the Scottish & Newcastle takeover of Courage was allowed through with such slender undertakings.

The Department of Trade and Industry only required S&N to dispose of 115 pubs and free a further 1,000 pubs from the tie.

A hundred years ago there were 1,500 brewing companies in the country, but if the Bass deal goes through it will leave the three big brewers accounting for four in every five pints brewed in Britain.

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