CMA could refer Greene King bid for Spirit for a second investigation

11th May 2015 12:44

The Competition and Markets Authority has said that Greene King's bid for sector peer Spirit Pub Company will be referred for an in-depth phase II investigation, unless acceptable undertakings are offered.Greene King and Spirit run respectively around 1,900 and 1,200 pubs and small restaurants in the country, with approximately 1,000 Spirit pubs overlapping Greene King establishments in a number of areas.On Monday, the UK antitrust regulator said that after investigating the bid, it found that in a certain number of areas pubs of both chains were rivals because of their proximity and of the lack of direct competition from other outlets.Should the merger be completed, the CMA added, that could lead to an increase in prices or to decline in the standards of the offering. CMA said the offer also presented a "realistic prospect of a substantial lessening of competition in 16 local areas".The regulator will refer the acquisition for a phase II investigation, unless the companies "offer acceptable undertakings to address the CMA's competition concerns in a clear-cut manner".In November, Greene King reached a takeover deal worth £773.6m, which would value Spirit shares at 115p each.Upon completion of the deal, Spirit shareholders will own approximately 28.9% of the combined company, with Greene King shareholders owning the remaining 71.1%.As of 12:54 on Monday, Greene King shares were down 0.61% to 812.00p, while Spirit shares were down 0.62% to 112.20p.