Slug and Lettuce owner gets go-ahead to become top pub group

(Reuters) - The UK's competition watchdog gave Slug and Lettuce owner Stonegate the green light to buy Ei Group <EIGE.L> on Friday, in a deal that would create Britain's largest pub company, and said it will not refer the merger to an in-depth investigation.

The Competition and Markets Authority (CMA) said it had accepted the undertakings given by Stonegate last month, which included selling 42 sites, to address competition concerns.

The watchdog last year had started an initial investigation into the 1.27 billion pound merger, saying it could damage competition in 51 local areas.

The CMA, which investigated the potential impact of the merger in more than 500 local areas across the UK, said if the businesses were to merge, pub-goers in 51 areas might face higher prices and lower product quality.

British restaurant and pub operators have had to cope with lower consumer spending and higher expenses, most notably from wage inflation and property costs, following Britain's vote to leave the European Union.

Stonegate, which is owned by private equity fund TDR, is best known for its Walkabout, Yates and Slug and Lettuce chains. In contrast, Ei runs a disparate range of pubs, often in partnership with landlords and small operators, who tailor their menus and entertainment to cater to local customers.

(Reporting by Tanishaa Nadkar in Bengaluru; Editing by Shounak Dasgupta, Bernard Orr)