CMA clears UK student accommodation merger

Out-Law News | 12 Nov 2019 | 12:01 pm | 1 min. read

The UK's Competition and Markets Authority (CMA) has cleared the anticipated £1.4 billion acquisition of student accommodation provider Liberty Living by Unite Group plc.

The CMA opened a phase 1 merger inquiry into the proposed transaction on 11 September, and had been seeking comment from interested parties about whether it could result in a substantial lessening of competition. It has now decided not to investigate the matter further.

Reasons for the decision have not yet been published.

Newton Anthony

Anthony Newton

Partner

For those either late to the party or looking to get back into the sector, targeting stock at a more affordable price point is likely to be an easier route into the market.

In a statement, Unite Group said that it now expected to complete the transaction at the end of November, subject to satisfaction of the remaining conditions. Richard Smith, chief executive of Unite Students, described the deal as a "transformative" one, which would lead to "more choice for universities and an enhanced service and welfare offer for students".

Real estate expert Anthony Newton of Pinsent Masons, the law firm behind Out-Law, said: "This merger is further evidence of the consolidation that we have seen in the sector over the last few years".

"Particularly at the high end of the market, very large portfolios are held by a handful of global institutional investors," he said. "The knock-on impact of this deal will be interesting as the two portfolios are integrated in the coming months."

"For those either late to the party or looking to get back into the sector, targeting stock at a more affordable price point is therefore likely to be an easier route into the market," he said.

Warrington Giles

Giles Warrington

Partner

It will be interesting to see to what extent the CMA looked at local market issues - or even looked at the merger on a university-by-university basis – and how it satisfied itself that there were no competition concerns.

Unite Group is the UK's largest and oldest provider of purpose-built student accommodation (PBSA), managing around 140 residences in 22 cities across the country. Liberty Living, which is owned by the Canada Pension Plan Investment Board (CPPIB) manages 51 PBSA residences in 19 UK cities. The CPPIB will hold a 20% stake in the enlarged Unite Group once the transaction is complete and will also have the right to appoint one non-executive director to the Unite board.

Competition law expert Giles Warrington of Pinsent Masons said: "The CMA's full decision may not be available for a week or more, and so its reasoning for the clearance is not yet clear".

"It will be interesting to see to what extent the CMA looked at local market issues - or even looked at the merger on a university-by-university basis – and how it satisfied itself that there were no competition concerns," he said.