By SZ - 30th June 2003
The European Commission has given the green light for UK brewer Scottish & Newcastle's (S&N) €400 million purchase of cider producer HP Bulmers, after finding that market overlaps in the UK were insufficient for Brussels regulators to scupper the deal.
The market move comes after S&N's intended €3.24 billion sale of its 1,400 pubs and restaurants during a period of heavy debt restructuring for the beer giant.
Scottish & Newcastle is primarily involved in the brewing, wholesaling and retailing of beer in the UK, but also operates cross-border selling in other European countries.
Bulmers concentrates on cider manufacturing and supply in the UK, with a growing export operation to both EU and non-EU markets. It is also active in the wholesaling and distribution of beer and cider in the UK through a linking subsidiary arm, The Beer Seller.
Under the tie-up, Bulmers' brand name cider business, Strongbow, Woodpecker and Scrumpy Jack will be added to S&N's Scottish Courage subsidiary whose portfolio includes John Smith's and Foster's.
The commission's analysis of market concerns from the merger was split between wholesale and distribution to the 'on-trade sector' (pubs, clubs and restaurants) and the 'off-trade' sector (shops and other retail outlets).
Whilst Brussels regulators did find minor market overlaps in the UK, with S&N and The Beer Seller both selling beer and cider to the on-trade sctor, the commission deemed potential market monopolisation at a low enough level to see through the deal.
The move, which sees S&N take on Bulmers' €131 million debt, will also pave the way for the UK company's purchase of the remaining 51 per cent stake in Portuguese brewer Central de Cervejas.
Job cuts are widely expected at Bulmers, with hundreds of marketing, sales and administration posts cleared to go.
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