National news

Heineken win takeover battle for Punch Taverns

Written by Steve Bury

Industry figures have expressed ‘serious concern’ over Heineken’s bid to acquire almost 2,000 Punch Taverns pubs.

Pub and bar operator Punch Taverns, which owns 3,300 pubs has recently made a profit of £60 million after two years of losses. Its share price has subsequently soared recently, prompting take-over bids. One of the interested take-over parties was a consortium of shareholders called Emerald who own 52.3% of Punch shares, but they dropped out when the bids exceeded 185 pence per share. This let in Heineken who are taking 1,900 Punch Pubs. This left the rest of the Punch estate, some 1,400 pubs, to be run by a separate company Patron Capitol. The whole Punch estate was valued at over £400million at the time of take over. Heineken currently owns 1,049 leased pubs through its Star Pubs & Bars division.

The Punch acquisition would give it a combined pub estate of almost 3,000 sites making it the third largest pub company in the UK behind Enterprise Inns and Greene King.

Heineken in conjunction with Patron have also taken over the £1.4 billion Punch debt. On paper the average price per pub was £160,000 but has to be taken in context of the debt which is 4.5 times the price paid.

The 1,900 pubs will be run by Vine Acquisitions until Heineken obtain regulatory approval, which could mean that they will not officially take them over for several months.

We do not know much about Patron Capitol who are taking the 1,400 remaining pubs, but they appear to have no experience of pub ownership. There are 73 Punch pubs in this county – quite a high proportion of our 900 or so pubs – and some key and well-loved pubs amongst them. In some areas Punch have a monopoly. In London Colney for example they own all its three pubs. The same applies to the two pubs in Newgate Street, so any restriction of beers will be enormously detrimental if this materialises.

Will all the beer be supplied by Heineken? They own Caledonian Brewery who in turn own Harviestoun Brewery. Heineken also own John Smiths and Theakston’s, so potentially the beer range in ex-Punch pubs will be severely reduced. On the flipside Heineken are likely to invest more than double the last profit made by Punch into the pubs each year rather than simply paying off debt.

Good news for pub investment. Bad news for beer range.

As far as Hertfordshire is concerned we need to know which Punch pubs have gone to which new owner. Presumably they will be getting different deals and beer range.

But the British Pub Confederation (BPC), which represents tied tenants, warned the merger would make Heineken the UK’s biggest brewing pub owner, leading to fears over consumer choice and the future of Punch tenants.

The organisation, which has written to the Competition Commission asking for the takeover to be scrutinised, claims Heineken’s operational model has moved away from traditional wet led pubs to larger managed sites that are focused on food. This would be a ‘major concern for any Punch tenant’ running a traditional pub with its heart in the local community, the Confederation said.

Greg Mulholland MP, BPC chair described the idea of one giant pubco as ‘very worrying’, adding that successful pubs generally have the freedom to trade and buy beer from the breweries whose beers their customers want to drink. “It would not be in the interests of consumers or licensees to have Heineken buying Punch,” Mulholland said. “To have a giant brewing pubco taking on one of the two giant pub-owning property companies would be a huge step backwards and could restrict choice for both licensee and customer alike and this must be referred to the Competition Commission. There is also the danger with Heineken wanting pubs to stock their own products that they would be looking to ‘churn’ existing Punch licensees to be able to do so, which would be completely unacceptable”.

CAMRA national chairman Colin Valentine said: “CAMRA is seriously concerned about what effect Heineken’s proposed takeover of Punch Taverns would have on pub-goers and beer drinkers in the UK. Heineken currently owns 1,100 Star Pubs & Bars and this proposed takeover would expand that portfolio to 3,300 — making them the second largest pub company chain in the UK.
UK pubs should offer a wide range of good quality beer and should be diverse enough to serve their respective communities. Any attempt to monopolise the industry goes against the spirit of the great British pub and undermines the ‘local’ philosophy that is part of the rich heritage of the pubs trade.

CAMRA is concerned that Heineken, with only around 15% of their current pubs’ drinks brands provided by other producers, will severely restrict the choice available in premises currently owned by Punch Taverns. As the company themselves have said “no-one expects a Costa Coffee-owned outlet to be permitted to sell Starbucks coffee”. Whilst we would neither anticipate nor have any interest in a Heineken-owned pub stocking Carling lager, we do expect that whoever eventually owns the Punch Taverns portfolio will continue to provide drinkers with a real choice. That means stocking a range of affordable real ales, ciders and perries – so that customers are able to enjoy a wide range of products from British brewers and producers. We also expect the pub-owning company to acknowledge that any ‘local’ has stakeholders whose wishes and needs must be taken into account, not least when a decision is being made in respect of the future of any particular pub.

Locally we can take Heineken’s commitment to real ale to task. When they took over Caledonian Brewery we were told by the then account manager for our area that the national budget allocated to promoting Caledonian cask brands was £50k total, and because of that all beer festival support was being withdrawn. Subsequently as CAMRA members will attest Caledonian brands were run down in the free trade and a once ubiquitous brand in the local area disappeared.

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