UK: Punch buys Spirit, becomes UK number one
Punch Taverns has secured the purchase of the Spirit pub group. The deal, announced today (1 December) signals defeat for property tycoon Robert Tchenguiz, who was reportedly set to enter into exclusive talks with Spirit earlier this week.
Punch's acquisition of the private equity-owned company is for GBP2.68bn (US$4.6bn), including the assumption of around GBP1.23bn of debt. Spirit has an estate of 1,832 predominantly community pubs located across the UK. The transaction will make Punch the UK's largest pub group, ahead of Enterprise Inns, adding to its 8,200 pubs.
Giles Thorley, Punch's chief executive, said: "This is an exceptional deal for Punch. The proposed acquisition of Spirit will further increase the scale and quality of our estate. The acquisition also provides shareholders with a strongly enhanced earnings profile, returns in excess of cost of capital and excellent growth potential."
Punch said that its directors believe that, within the Spirit estate, there are a large number of pubs which would be better run on its leased and tenanted model.
"The acquisition is in line with Punch's strategy to further increase the overall quality of its estate," the company said.
Punch's intention is to convert around 750 pubs to a leased/tenanted format within two years and initially sell 82 other pubs for alternative use. A detailed performance review will be undertaken to assess the best method of realising value from the rest of the portfolio.
A total of 203 pubs from the Punch estate will be sold to Admiral Taverns for GBP40m, Punch also announced today.
Spirit had received four bids for the business by last week's deadline, including those from Punch and Tchenguiz, who was poised earlier this week to enter exclusive talks to buy the group for GBP2.8bn, media reports claimed.
Spirit is owned by private equity groups Texas Pacific Group, the Blackstone Group and CVC Capital Partners, along with investment bank Merrill Lynch, with Spirit's management holding a small stake.
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