Punch landlords back investigation into Heineken takeover

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Punch landlords have expressed concerns the takeover deal would reduce choice for customers

The U.K. antitrust regulator on Thursday said it is opening an investigation into Heineken NV's plan to drop £305 million ($380 million) to purchase roughly 1,900 pubs owned by Punch Taverns in the country to assess the transaction's effects on competition.

The planned £305 million acquisition, announced in December, would create the third largest pubs group in the United Kingdom, with nearly 3,000 outlets.

The Dutch brewing giant sealed a deal in December to snap up Punch Taverns alongside private equity firm Patron Capital, having seen off a rival bid from the pub chain's co-founder Alan McIntosh.

Paul Waterson, chief executive of the Scottish Licensed Trade Association, has been a vocal critic of the deal.

He told CNBC: "Although the pub sector in the United Kingdom has been contracting over the last few years, when you do things right it is a very good business to be in".

Of the approximately 3200-pub estate, Strongbow and Foster's maker Heineken will get around 1900 pubs, giving it a total of around 3000 United Kingdom watering holes.

In early trading, Punch shares shed 0.7%, or 1.25p at 177.50p.

The news comes less than 24 hours after Heineken stated in their company results that they expected the deal to complete by mid-2017.

Heineken first moved into the United Kingdom pubs market in 2008 when the Dutch giant acquired Scottish & Newcastle.

Lawson Mountstevens, Managing Director of Heineken's Star Pubs & Bars said: 'We are aware that some Punch tenants are concerned that we will force them to purchase only Heineken brands.

On Wednesday Heineken unveiled 6.5 per cent growth in revenue in 2016, to €20.5 billion, with operating profit up 4.7 per cent to €2bn.

A spokesperson today said Heineken will be "fully cooperating" with the CMA. "We look forward to receiving the findings of the investigation".

Punch shareholders approved the deal last week.

After the deal, Heineken would be the third-largest United Kingdom pub operator by number of sites, behind Greene King PLC and Ei Group PLC, the recently renamed Enterprise Inns.

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