Takeover unveiled

Heineken drinks to £305m Punch pubs deal

brewed-and-baked-musselburghHeineken today unveiled a £305 million recommended cash offer for 1,900 Punch Taverns pubs

The Dutch group entered the UK pub market as part of its acquisition of Scottish & Newcastle’s operations in the UK in 2008.

Since then, it has made significant progress building its Star Pubs & Bars business, having invested over £20m per annum since 2014, and resulting in an estate which now comprises 1,049 leased and tenanted pubs.

Punch shareholders will receive 180p per share in cash, a premium of more than 40% to Punch’s closing price on Tuesday, a day before a potential deal was first reported.

On completion of the transaction Heineken will become the thirdlargest pub business, in what remains a highly fragmented pub market.

Heineken’s offer is with investment partner Patron Capital, which will buy other assets, and together it is worth £403 million.

Punch said the deal with the pair had the support of its top three investors representing about 52.3% of its existing share capital, but that their commitment would lapse if there was a rival offer of 200p a share or more.

Punch said on Wednesday it had received two takeover approaches, a possible 174p per share offer from Heineken and its partner, and a higher 185p per share proposal from Emerald Investment Partners, founded by Alan McIntosh, the pub group’s former finance director.

Punch reported its full year revenue of £242.9 million and underlying FY EBITDA of £109.6 million.

The company operates 230 pubs across Scotland from The Crown Inn in Stornoway, Lewis to the Anchor Hotel in Kippford, Dumfriesshire.

Before the deal was confirmed the Scottish Licensed Trade Association expressed “grave concerns” over the possible deals.

Its chief executive, Paul Waterson, said: “It would create a ‘monster-tie, ‘a chain of over 4,400 pubs that would destabilise an already fragile industry.

“A backwards move, it represents bad news for brewers, whose route to market will almost certainly be controlled by Heineken.

“It also signals bad news for drinkers who will be offered far less choice at the bar. Moreover there are disturbing implications for tenants who are already compromised by the tied pub system, especially in Scotland where there is an absence of legislative protection.

“Competition is crucially important to the on-trade and so we hope that the CMA duly investigates.”

Under UK takeover rules, both potential bidders have until 11 January to say if they will make a firm offer for Punch.

Photo: Brewed and Baked, Musselburgh

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