UK: Fuller's bid for Capital Pub Co turns ugly
London Pride brewer Fuller, Smith & Turner in war of words with Capital Pub Co
Capital Pub Co has refuted accusations by its would-be acquirer, Fuller, Smith & Turner, that the UK group's growth ambitions are flawed.
Fuller's' attempt to acquire Capital for GBP54m (US$86.5m) is turning increasingly ugly. Yesterday (22 June), the London Pride brewer said that it still wants talks with Capital's board, but it accused the group's directors of issuing unrealistic growth targets in order to justify a higher value for the business.
"It has taken Capital over ten years to grow its estate to 34 pubs," Fuller's said. "Fuller's believes that the strategy to grow the estate by a further 11 to 16 pubs (which represents a 32 to 47% increase in the estate) over the next two years has considerable risks associated with its execution which could dilute the overall quality and attractiveness of the estate."
Today, however, Capital's CEO, Clive Watson, accused Fuller's of playing dirty. "Fuller's has made an indicative offer proposal at GBP2 [per share] and is seeking to justify an inadequate value for the Capital business by questioning the group's growth potential," he said.
"The Capital board have made it clear that there is no intention of engaging with Fuller's on the proposed indicative offer terms."
At the same time, Capital announced the acquisition of a London pub for GBP2.9m, taking its total estate to 35. It plans to have between 45 and 50 pubs by 2013. In the first ten weeks of its current fiscal year, the group said that like-for-like sales rose by 11%.
However, Fuller's said: "Fuller's believes that Capital will most likely be required to issue further equity to fund its growth strategy should it wish to continue acquiring freehold assets in London." The London-based group added that its offer compares favourably with recent deals in the UK pub sector.
Earlier this week, Capital reported a 26.3% rise in net sales for the year to 26 March, to GBP27.2m. Operating profits bounced back strongly to GBP5.2m, versus just GBP397,000 in a previous year hit by impairment charges. At the bottom line, the company returned to the black, reporting net profits of GBP2.5m against losses of GBP1.3m in the prior year.
For the full results statement, click here.
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