UK: Merger of Carlsberg UK and Marston’s delayed

Marston’sinformed today that the planned merger with Carlsberg UK which was announced in May (, 22.5.2020) will be delayed. The company said “that for procedural reasons, the UK Competition and Market Authority (CMA) rather than the European Commission will now likely be the relevant competition authority. As a result, completion is now anticipated to take place slightly later than expected as the CMA completes its review.” Completion is now expected in fourth rather than the third quarter of this year following shareholder approval and competition authority clearance.

The Campaign for Real Ale (CAMRA), a consumer organization founded in 1971 with more than 200,000 members across the UK expressed its concern about the proposed merger and called it “a red flag to beer drinkers and pub goers across the UK” that is “cause for concern about the future of British beers, brands and breweries.”

Last week CAMRA said that it had called on the CMA to take the lead and investigate the proposed merger. “The Campaign is now asking the CMA to prove its credentials in standing up for consumers and commit to triggering what is known as the ‘Article 9’ referral procedure – meaning that the UK competition body could lead an investigation instead of the EU Commission, because the joint venture will mainly impact the UK beer and pub market.   CAMRA’s calculations show that the UK beer and pub market is becoming less and less competitive with every new merger or acquisition of a smaller brewer by a global brand. Global brewers currently have a 25.25% share of UK pub companies, which by CAMRA’s calculations will rise to nearly 32% if the proposed joint venture is allowed to proceed without intervention.”

Marston’s however said it does “not expect that the transaction raises any competition concerns” and is “satisfied that the Group has sufficient liquidity in place to meet its requirements ahead of completion,” the stamen ends.

The new Carlsberg Marston’s Brewing Company will unite two of the leading brewing groups in the UK with a huge portfolio of international, national and regional brands. According to the terms of the deal Carlsberg will hold 60% and Marston’s the remaining 40% in the new company. Marston's Brewing Business will be valued at up to £580m (USD 746m, 13.0x adj. 2019 EBITDA) and Marston’s will receive a cash equalisation payment of up to GBP 273 million (USD 351m). The reported run-rate joint-venture cost synergies are expected to be at least GBP 24 million (USD 31m).

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