The alternative is death by a thousand cuts at least for one of
The alternative is death by a thousand cuts, at least for one of the players.Most ordinary people would not share that view, however. Some breweries are clearly going to have to be sold and there is even a chance Bass could be forced to cede at least some of what remains of its tied estate. With such a wide-ranging carve-up in prospect, is it all going to end up being worthwhile? That really depends on how much the Government is prepared to let Bass keep. Looked at from a businessman's perspective, what Bass is trying to do makes obvious sense There's far too much capacity left in this industry We simply do not need as many big breweries as we used to. Even a Government as relaxed about private sector monopolies as this one might have some difficulty with that.If Bass is going to be allowed to do this deal at all, therefore, the competition authorities are going to want to extract a high price.
The combined market share of Bass and Carlsberg Tetley would be somewhere in the region of 40 per cent and in some areas - the Midlands and Yorkshire - it could be as high as 70 per cent. ,Whoopee, thought Bass, which until S&N overtook it with the Courage takeover, was number one in the market Anything goes now. Well, not quite. Bass may now be front-runner in protracted talks over the future of Carlsberg Tetley (Whitbread is hovering in the wings too), but any deal would be frought with regulatory difficulties. This despite the fact that it breached an important benchmark - that any merger resulting in a market share above 25 per cent should at least be examined by the Monopolies and Mergers Commission. Now it looks as though we might get something even more daring - a Bass takeover of Carlsberg Tetley.
When S&N acquired Courage the Government just waved it through with minimum conditions attached. We've already had Scottish & Newcastle's takeover of Courage. The actuaries may try to allay the concerns of employers about the huge sums that would have to be disclosed by suggesting techniques that would smooth out the big variations in capital value.. Big consolidating mergers are all the rage in most industries these days and brewing is no exception.