Granada, Radio Rentals to merge

By THIS IS MONEY
Updated:

 

The merger between the UK's two leading TV rental chains, Granada and Radio Rentals, has been cleared - paving the way for the creation of a nationwide giant with 900 stores and the clout to take on the top TV retailers.

Trade and Industry Secretary Stephen Byers decided not to refer the £1bn merger to the Competition Commission if the new company agrees to undertakings to protect heavy users of rented TV, such as older people.

In a deal last December, Granada Group and Nomura-owned Radio RentalS agreed to combine their TV and video recorder rental businesses in a new grouping called Box Clever, with two million customers, and compete with TV retailers Dixons Group Plc and Kingfisher Plc's Comet stores.

Byers' decision was in accordance with the advice of the Director General of Fair Trading, but he did point out that although rental forms a small part of the overall market, it was an important option for the elderly.

'There may be scope for Box Clever to exploit this customer group and I want to ensure they are protected against this. I have therefore asked the DGFT to seek undertakings from the parties requiring Box Clever,' he said in a statement.

Both Granada and Radio Rentals welcomed Byers' decision and were confident they could meet his undertakings.

'We fully appreciate the Government's desire to protect consumer interests. We look forward to working closely with the government and believe we can reach a satisfactory agreement on the undertakings required,' said Granada Technology Group chief executive Roger Mavity and Box Clever's new chief executive.

The deal is backed by private equity group WestLB, and because it involved the only two significant rental TV players, was always likely to have come under scrutiny by the regulators.

Mavity had argued the deal was pro-consumer, as the merged grouping would only have seven percent of the total TV market in Britain against two retail-only competitors Dixons with a 26 percent share and Comet at 12 percent.

At 1400 GMT, Granada shares were up 1/2 pence at 635p, Dixons down 19 at 253- 1/2p and Kingfisher 3- 1/2 lower at 537p in a firmer overall London stock market.

Byers' undertakings stipulated that Box Clever should not increase rental charges for all existing rental contracts and for new customers who rent for more than five years without upgrading equipment, and should adopt a minimum rental period of 12 months for all customers.

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