UK: Punch Taverns to split business, sell 3,000 pubs
- Pub group to demerge divisions
- To sell half of leased pub estate
- Plans to retain Matthew Clark stake
Punch Taverns to sell half of leased pubs
Punch Taverns has said that it will split its business in the UK and will sell off half of its leased pub estate over the next six years.
Punch warned today (22 March) that its current business model is not sustainable and that, following a strategic review, it has decided to demerge its managed and leased pub operations. It plans to halve its leased pub estate, to a core of 3,000 pubs, by disposing of 500 pubs annually.
As one of the leading pub groups in the UK, Punch Taverns has suffered during a tough few years for the UK on-trade.
Impairment charges have dragged Punch Taverns into the red in its last two fiscal years. The group said today that it expects the UK's 'drinking out' market to decline by a further 3% per year over the next five years.
Despite this, Punch Taverns' CEO, Ian Dyson, said: "We believe that there is a significant value creation opportunity at Punch, with immediate upside in Managed and longer term upside in Leased.
"A demerger will provide the platform to enable both businesses to focus on the very different strategies required to deliver shareholder value and will provide choice and liquidity for investors."
Under the demerger plan, the group's managed pub division, known as Spirit, will be listed as a separate public company. The group expects to complete its demerger by "the end of the [UK] summer".
Prior to today's announcement, there had been speculation that Punch Taverns would sell its 50% stake in Matthew Clark, the on-trade drinks distributor that it co-owns with Constellation Brands. A change of ownership at Constellation Europe has heightened speculation of a sell-off.
However, Punch said today: "We intend to retain Matthew Clark within the group."
For the full announcement, click here.
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