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Tenants agitated over Heineken's bid for Punch

Some publicans are worried there could be a compulsion to prioritise Heineken products and are disconcerted by regulators' silence in possible issues linked to the deal
February 9, 2017

Tension was mounting in the run-up to Heineken's bid for Punch Taverns (PUB) after some of the UK group's publicans raised concerns about whether they would be forced to stock the Dutch brewer's brands.

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The Punch Tenant Network said it feared Heineken would strong-arm the roughly 1,900 pubs it hopes to take over into selling its brands above others. And there was also concern about the lack of clarity from regulators about whether a takeover would constitute a so-called trigger event for a market rent only (MRO) option review. The MRO was launched last year and gives publicans the opportunity to just pay rent to the owner company. Each pub has a review, date but a change can be triggered earlier under certain circumstances, such as a pub company steeply raising prices.

The Punch Tenant Network's Chris Lindesay said the lack of guidance from regulators was an issue because if the takeover constituted a trigger event publicans needed to know in advance as they would only have a few weeks to decide whether to take the MRO route. And if it wasn't a trigger event, Mr Lindesay wanted reassurances that existing agreements with Punch could not be rewritten.

A Heineken spokesman said it had a "shared interest in working constructively" with licensees in its Star Pubs & Bars estate, adding that it had "no intention of imposing blanket conditions which are detrimental to that shared aim", adding that Punch publicans' leases would "continue as before".

Heineken has stated the deal provides a "strong platform to improve visibility and increase sales" of its beers and ciders, but the spokesman noted it offered non-Heineken brands to Star Pubs licensees.

Shareholders vote on the deal on 10 February.