The CMA has launched phase one of its investigation following the European Commission’s decision to refer the case to the United Kingdom under Article 4(4) of the EC Merger Regulation.
The deadline for the phase one decision is 16 December, with the opportunity to comment now open until 25 October.
Stonegate agreed to buy Ei Group for £1.27bn earlier this year (July). The deal would mean Stonegate’s estate would rise by 4,000 sites, making it the largest pub owner.
A total of 96.57% of Ei shareholders voted in favour of the acquisition, which will see Stonegate buying Ei for 285p per share on 12 September.
The acquisition values Ei Group’s entire business at £2.97bn – around 11.4 times Ei Group’s underlying earnings before interest, depreciation and amortisation (EBITDA) of £261m for the financial year ended 30 September 2018, including its debt and adjusted for the recent disposal of 370 commercial properties.
Stonegate boss Simon Longbottom previously told The Morning Advertiser the pubco is prepared to pump money into all aspects of Ei Group’s estate, if the deal goes through.
He said: “The big thing is investment, we can unlock capital to invest in this pub estate, whether tenanted and leased or managed.”
Lot of experience
When asked whether Stonegate was set to change the tenanted and leased model, Longbottom said it was too soon in the buying process to discuss.
He added there was a lot of experience around tenanted and leased within both companies and reiterated investment would be a focus.
Longbottom’s previous experience at Greene King would help to ensure the success of the company, he added.
“Our rationale has been that these are two great businesses and they would be even better together,” Longbottom said.
“There’s complementary platforms in terms of culture and management, as well as strong skills and experts within both businesses.”