Carlsberg, Marston’s brewing US$1B merger given a go ahead by CMA

UK – The Competition and Markets Authority (CMA) has approved the £780 million (US$1.01 billion) joint venture deal between the UK division of Carlsberg and Wolverhampton brewing giant Marston’s.

It judged that the deal would not adversely affect competition in the beer and cider industry, particularly among independent brewers and wholesalers.

The agreement between the two companies would create the new Carlsberg Marston’s Brewing Company (CMBC), with Carlsberg UK owning 60 per cent and being able to sell their drinks in Marston’s 1,400 pubs and bars.

This means pints of Danish Pilsner, Tuborg and Somersby Original Cider could be served alongside glasses of Wychwood Hobgoblin, Pedigree Amber Ale and Revisionist Craft Lager.

“Today’s decision is a significant milestone in the formation of the new company, which we believe will create significant value for employees, customers and beer-drinkers in the UK.”

Tomasz Blawat – managing director, Carlsberg UK

In turn, Marston’s will receive a £273 million (US$353.53m) upfront payment from Carlsberg, which it has said will go towards reducing their debts and give them greater ability to focus on their pubs and accommodation business.

“Today’s decision is a significant milestone in the formation of the new company, which we believe will create significant value for employees, customers and beer-drinkers in the UK, and we look forward to moving to the next stage on this journey,” Tomasz Blawat, Carlsberg UK’s managing director, said.

The transaction is expected to be completed by the end of October, three months after the CMA began its investigation into the deal.

Among the factors the public body considered was whether Marston’s would sell more Carlsberg products at the expense of independent brewers.

However, it said that because Marston’s pubs constitute only a small part of the potential customer base for brewers, smaller brands would still have ‘sufficient’ ability to sell their goods to other pubs.

It drew a similar opinion about the combined companies’ wholesale operations, saying that brewers will have sufficient alternative wholesalers to choose from after the deal.

Finally, the CMA determined that Marston’s primarily focuses on selling ales while Carlsberg’s business is more concentrated on lagers, making competition limited between the pair of them.

“They also face several competitors in all of the product categories where they are both active. The CMA’s investigation has therefore concluded that the deal does not give rise to competition concerns,” CMA added.

The joint venture arrangement comes at a challenging time for pubs and brewers, which were hit by the closure of hospitality venues in late March and a tumble in sales and footfall after they were allowed to reopen in July.

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