Good morning, it's Paul here!

Many thanks to Graham for producing excellent reports last week & yesterday. This enabled me have a stress-free holiday in Dubrovnik, Croatia. What a beautiful, unspoiled place! If you haven't been, then I highly recommend it.




Revolution Bars (LON:RBG)

Share price: 210.6p
No. shares: 50.0m
Market cap: £105.3m

(at the time of writing, I hold a long position in this share)

Preliminary results - for the 52 weeks ended 1 Jul 2017.

This is a UK premium bars chain, with 2 formats, "Revolution", and "Revolucion de Cuba".

The figures are only really of passing interest, since an agreed 203p cash takeover bid from Stonegate (a fairly large, acquisitive pubs group) is now well-progressed. The share price has stuck at around 210p, so clearly the market is factoring in the possibility of a higher, competing bid. The only other player we know about currently, is nightclubs operator, Deltic. They have issued a number of RNSs, saying that the Stonegate bid undervalued Revolution (correct, it does - I think Revolution could be worth up to 300p/share if a number of rival bidders got involved - it stacks up on a EV/EBITA multiple at that level, once duplicated central costs are stipped out). So this is a situation where Revolution is worth more to a trade buyer, than to a financial buyer, such as private equity.

I've looked through its accounts, and Deltic does not look a particularly credible bidder - it doesn't have any money to make a cash bid. So it would need to raise cash from somewhere. It's possible that Deltic's shareholders might have deep pockets, independently of Deltic, who knows? Their announcements to date indicate perhaps not. They're pushing for a merger. I don't see there being any appetite for that. The market just dislikes bar groups - there's widespread indifference or distrust of them.

Note 1 outlines prior year adjustments made by the new FD. This reads like a catalogue of errors. It is now abundantly clear that RBG had a pretty hopeless finance department, which just wasn't up to the job - hence the profit warning in May, which was caused by poor budgeting. The new FD seems tons better. In a meeting with him earlier this year, he was clearly on top of the job &…

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