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M&B sell 333 pubs to start-up Pubco for £373 million
Mitchells & Butlers announced today that it has agreed to sell 333 pubs to Stonegate Pub Company Limited, controlled by funds managed by TDR Capital LLP for a total cash consideration of £373 million, if approved by M&B shareholders.
The pubs being sold are what M&B describes as Non-Core Pubs, which operate in the drinks-led market. This has been negatively impacted by long term social trends away from drinking out without food. In the last few years these trends have been accelerated by the smoking ban, duty increases and the recession. The increased level of youth unemployment has put further pressure on the more price sensitive end of this market. M&B wants to focus it's growth effort on the informal eating out market where its food-led brands will benefit from longer-term growth trends. Following the disposal, Mitchells & Butlers' "core business" will comprise 1,580 restaurants and food-led pubs.
The core business had pro forma revenue and operating profit for the 52 weeks ended 10 April 2010 of £1,667million and £271million respectively. Furthermore, the core business has grown revenue by 8% and operating profit by 4% between 2007 and the 52 weeks ended 10 April 2010. Operating profit per pub has increased by 3% per annum over this period.
The 333 non-core Pubs include 52 Scream bars, 71 High Street Bars & Venues, 75 Town Pubs and 67 Community Pubs, whilst the remaining 116 Scream, Bars & Venues, Town Pubs and Community Pubs within the estate will be converted into one of its expansion brands. Those 333 non-core premises generated a revenue of £239 million and an EBITDA of £52 million in the 52 weeks ended April 10th 2010.
TDR Capital which is a private equity firm based in London and founded in 2002, has previous experience of investing in Punch, CenterParcs, Ask and Pizza Express. TDR Capital currently manages funds worth €2.6 billion and is led by Manjit Dale and Stephen Robertson. Stonegate, backed by funds managed by TDR Capital, has agreed to pay an £18 million break fee to Mitchells & Butlers if it does not fulfil its obligations to complete the deal.
Adam Fowle, the new M&B Chief Executive, commenting on his first big move said:
"We are pleased that we have been able to announce the exit from our price sensitive drinks-led pubs and our late night venues in a single transaction. This disposal, when combined with the sale of our lodge and bowling businesses, completes the first stage of our strategy. This will now enable us to reinvest in the informal eating out market where our market leading brands, corporate scale and operational capability will deliver attractive growth and investment returns for our shareholders."
M&B shares closed last night at 295.8p valuing the company at £1209 million and opened up this morning.
The pubs being sold are what M&B describes as Non-Core Pubs, which operate in the drinks-led market. This has been negatively impacted by long term social trends away from drinking out without food. In the last few years these trends have been accelerated by the smoking ban, duty increases and the recession. The increased level of youth unemployment has put further pressure on the more price sensitive end of this market. M&B wants to focus it's growth effort on the informal eating out market where its food-led brands will benefit from longer-term growth trends. Following the disposal, Mitchells & Butlers' "core business" will comprise 1,580 restaurants and food-led pubs.
The core business had pro forma revenue and operating profit for the 52 weeks ended 10 April 2010 of £1,667million and £271million respectively. Furthermore, the core business has grown revenue by 8% and operating profit by 4% between 2007 and the 52 weeks ended 10 April 2010. Operating profit per pub has increased by 3% per annum over this period.
The 333 non-core Pubs include 52 Scream bars, 71 High Street Bars & Venues, 75 Town Pubs and 67 Community Pubs, whilst the remaining 116 Scream, Bars & Venues, Town Pubs and Community Pubs within the estate will be converted into one of its expansion brands. Those 333 non-core premises generated a revenue of £239 million and an EBITDA of £52 million in the 52 weeks ended April 10th 2010.
TDR Capital which is a private equity firm based in London and founded in 2002, has previous experience of investing in Punch, CenterParcs, Ask and Pizza Express. TDR Capital currently manages funds worth €2.6 billion and is led by Manjit Dale and Stephen Robertson. Stonegate, backed by funds managed by TDR Capital, has agreed to pay an £18 million break fee to Mitchells & Butlers if it does not fulfil its obligations to complete the deal.
Adam Fowle, the new M&B Chief Executive, commenting on his first big move said:
"We are pleased that we have been able to announce the exit from our price sensitive drinks-led pubs and our late night venues in a single transaction. This disposal, when combined with the sale of our lodge and bowling businesses, completes the first stage of our strategy. This will now enable us to reinvest in the informal eating out market where our market leading brands, corporate scale and operational capability will deliver attractive growth and investment returns for our shareholders."
M&B shares closed last night at 295.8p valuing the company at £1209 million and opened up this morning.
Fri, 20th Aug 2010