Stonegate bids to allay competition fears over acquisition of pubs rival
The CMA said it believes undertakings offered by the company could ‘remedy’ concerns over the £1.28bn deal.
Stonegate’s £1.28 billion acquisition of rival pub firm Ei Group appears to have moved closer after it offered the competition watchdog undertakings to address concerns over the deal.
The Competition and Markets Authority (CMA) said “there are reasonable grounds” for believing that Stonegate’s undertakings, or a modified version, could “remedy” its fears.
The regulator announced at the start of December that it believed the acquisition of 4,000 pubs by Stonegate could result in “substantial” weakening of competition.
It initially gave Stonegate a deadline of a week to offer undertakings to address these concerns.
The CMA has now said it will analyse Stonegate’s offer and decide by February 19 whether to accept the move.
It added that it could still extend this timeframe to April 17 if “it considers there are special reasons for doing so”.
Shortly after the CMA raised its concerns, industry publication Propel reported that the Slug & Lettuce owner was mulling putting around 40 sites on the market.
The CMA had said it believed Stonegate’s acquisition “could damage competition in 51 local areas” and put local pub customers at risk of price hikes.
However, the regulator said it had no concerns over competition on a national basis, and said the deal will be cleared without further investigation if a solution is found in these specific areas.
Stonegate agreed the acquisition to buy Ei – formerly knows as Enterprise Inns – in July as its private equity backer, TDR Capital, looks to drive growth despite the strain on the pubs sector and high street more broadly.