Capital Pub Company cheers Greene King takeover offer

Tuesday, Jul 19 2011 by
Capital Pub Company cheers Greene King takeover offer

AIM listed pub operator Capital Pub (LON:CPUB) has recommended that its shareholders back a 235p per share takeover of the company by FTSE 250 rival Greene King (LON:GNK). The move follows several months of speculation over a possible deal involving Capital Pubs, including two rejected offers of 175p and 200p from another pub group, Fuller Smith & Turner (LON:FSTA). In early trading this morning shares in Capital Pubs jumped by 26p to 236.5p; Greene King gained 2.70p to 482.9p and the Fullers share price was unmoved at 701.25p.

Greene King’s cash offer values Capital Pubs at approximately £70 million and implies an enterprise value of £93 million. The offer price represents a premium of approximately 51% to the closing price of 155.5p per share on June 16, 2011, which was the last dealing day before Capital Pubs entered an offer period. The offer price is inclusive of a final dividend of 2.25 pence. It is understood that the larger group has so far received irrevocable undertakings to accept the offer from shareholders representing 33.68% of Capital Pubs’ share capital.

Greene King said it believed the acquisition not only represented an opportunity to maintain and develop the existing strengths of Capital Pubs as part of the larger group, but also an opportunity to create an even stronger pub retailer within the attractive and growing premium eating and drinking out market in London. The combined business will operate approximately 250 pubs within Greater London and Greene King sees significant benefits from operating Capital Pubs alongside its recent acquisition, Realpubs, and its existing premium London pubs. There are also specific opportunities to grow food and accommodation participation within Capital Pubs. The acquisition of Capital Pubs is expected to be earnings enhancing to Greene King in the first full year of trading and will generate returns above Greene King’s cost of capital in year one.

Rooney Anand, the chief executive of Greene King, said: “The proposed acquisition represents another firm step as we continue to expand our presence in London. Capital Pubs would bring a further 34 premium pub assets and take our Greater London estate to approximately 250 at a time when London is outperforming the national pub market. This offer represents a fair…

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Greene King plc is an integrated pub retailer and brewer. The Company operates approximately 3,040 managed, tenanted, leased and franchised pubs, restaurants and hotels, including brands, such as Hungry Horse, Chef & Brewer, Flaming Grill, Farmhouse Inns and its Greene King locals estate. The Company's segments include Pub Company, Pub Partners, and Brewing & Brands. The Pub Company segment is engaged in the operation of managed pubs and restaurants. The Pub Partners segment is involved in the operation of tenanted and leased pubs. The Brewing and Brands segment is engaged in brewing, marketing and selling beer. The Company's ale brand portfolio includes Old Speckled Hen, Greene King IPA, Abbot Ale and Belhaven Best. The Pub Company segment operates approximately 1,820 pubs and restaurants across Britain. The Company's breweries include Westgate Brewery, which is located in Bury St. Edmunds, and Belhaven Brewery, located in Dunbar. more »

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Fuller, Smith & Turner P.L.C. is a pub and hotel company. The Company's operating segments include Managed Pubs and Hotels, and Tenanted Inns. The Managed Pubs and Hotels segment includes managed pubs and managed hotels, and The Stable Pizza & Cider Limited. The Tenanted Inns segment includes pubs operated by third parties under tenancy or lease agreements. The Company runs 181 Tenanted pubs and 204 Managed Pubs and hotels with a focus on home-cooked food, cask and craft ale, wine and service. The Company also has 817 boutique bedrooms in its Managed estate. Its pub estate stretches from Brighton to Birmingham and from Bristol to the Greenwich Peninsula, including 173 locations within the M25. The Company owns The Stable, a craft cider and gourmet pizza restaurant business, which has 17 sites in England and Wales. more »

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