England’s most popular beer could be axed from thousands of pubs if Heineken wins a £400m bid battle for Punch Taverns.
Carling is likely to be taken out of nearly 2,000 bars if the Dutch brewer snaps up Britain’s second-biggest pubs company, according to industry sources.
The lager will be replaced by Heineken’s flagship lager and by Foster’s, which the brewer owns the rights to in Europe. Carling, branded as “refreshingly perfect”, was declared England’s favourite beer last year in research by Vinepair, an alcohol website. Over the past decade, it has regularly been the UK’s No 1 beer by volume sold.
Punch recommended last week that shareholders accept a 180p-a-share takeover from Heineken and the investment firm Patron Capital. The two bidders will split Punch’s 3,350 pubs between them.
However, they face competition from Emerald Investment Partners, which is run by Alan McIntosh, Punch’s former finance director. Emerald has made an indicative offer and is understood to be preparing to table a formal bid early in the new year.
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Punch’s three biggest shareholders, which account for 52% of the shares, have agreed to back the Heineken bid, unless an offer above 200p is made. Punch’s shares closed on Friday at 190p, suggesting the market is optimistic a counter-bid could appear.
If Heineken is successful, the move will allow it to push its brands into thousands of pubs. It already owns 1,050 leased and tenanted pubs in its Star Pubs & Bars division. By taking over nearly 2,000 more outlets, Heineken will be able to edge out Molson Coors, the giant American brewer that owns Carling. Molson Coors is currently the main beer supplier to Punch, according to analysts.
Although pub owners cannot force tenants to buy certain brands, they give them little choice through a combination of attractive pricing and promotions.
In the past, Heineken has likened the arrangement to a coffee shop. “Nobody expects a Costa Coffee outlet to be permitted to sell Starbucks coffee,” it said this month.
“They’ve got Molson Coors by the balls,” said one drinks industry chief executive. “It’s a very smart move.”
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Molson Coors declined to comment this weekend. Heineken said it worked with tenants to find the right mix of brands.
For decades, companies would own pubs as well as brew beer, but the model has become less popular in recent years. Apart from Heineken, only Greene King and Marston’s operate this model at any scale.
Heineken is planning to invest in improving the Punch pubs if its bid is successful. It has spent millions on its Star pubs estate in recent years.
“This is a vote of confidence in well-run British pubs,” said David Forde, Heineken’s boss in Britain.
The swoop on Punch took some by surprise. “It would be easier to imagine Heineken selling their existing pubs than buying Punch,” said Nigel Parson, an analyst at the broker Canaccord Genuity.
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However, the interest in Punch could open the door to a wave of deals next year, analysts said. Shares in pub companies are cheap, but they typically carry a lot of debt — restricting the potential bidders. Among the likely targets are Enterprise Inns and Admiral Taverns.
