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Wednesday, August 12, 1998 Published at 09:57 GMT 10:57 UK

Business: The Company File

Off-licence chains to merge

The merged chain will have around 3,000 branches

Two of the UK's top off-licences are to merge, resulting in the closure of around 300 shops over the next three years.

Drinks giants Allied Domecq and Whitbread have reached an agreement which will see Victoria Wine and Thresher combine to create a major force in the industry with almost 3,000 shops.

A Whitbread spokeswoman said the expected closures were not radically different from the on-going rationalisation in the sector.

In the last two years, Victoria Wine and Thresher have closed around 200 shops between them.

The new business should come into being on August 30.

It is expected to have sales of more than 1.3bn a year. The two groups will each own half of the new company.

The two companies said it would "be able to compete effectively with the large supermarket chains, whose scale has enabled them to take an increasing share of the sector."

[ image: The merger will mean combined sales of 1.3bn]
The merger will mean combined sales of 1.3bn
Both businesses are nearly the same size and the merged chain will have around 15,000 staff.

Whitbread's Thresher chain also takes in Wine Rack, Bottoms Up, Drinks Cabin and Hutton's convenience stores, while Allied's Victoria Wine business also includes the Cellars, Haddows and Firkin off-licences.

Bigger clout

The industry has been under pressure from supermarkets in recent years.

In a report on the take-home beer market by Whitbread, supermarkets accounted for eight of the top 10 biggest beer retailers, with Thresher in fourth place and Victoria Wine seventh.

The merger will allow Allied Domecq and Whitbread to use their combined buying power to strike better deals with breweries and suppliers and to use marketing to lure customers away from the supermarkets.

But the deal could face the competition authorities because of possibilities of branch closures, where the two chains compete head-to-head as well as the threat it poses to independent retailers.

The merger will be among the first major competition issues to face Peter Mandelson, the new Secretary of State for Trade and Industry.

He will have to decide whether the deal should be referred to the Monopolies and Mergers Commission.

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