Group out of bidding for Pitcher & Piano after Wolves stands firm
Regent Inns is set to walk away from the bidding for the Pitcher & Piano bar chain after owners Wolverhampton and Dudley Breweries (W&DB) rejected its £62m cash offer.
W&DB is said to be confident it can raise at least £65m from the sale. A source close to the company said there are three other interested parties, including two private equity houses.
The Prudential-backed Barracuda Group, headed by Mark McQuater, has been linked to the sale and SFI, the pubs and restaurants group, is also interested - but only if the price falls to £55m.
Regent dropped its original offer, thought to be in the region of £70m to 75m after the chain suffered disappointing like-for-like sales. Concerns from within Regent have been expressed over Pitcher & Piano's trading figures.
A source close to Regent said: "The company does not believe the chain to be worth any more than £62m and hence the final offer. W&DB believes it can get at least £65m but the figures just don't stack up."
W&DB is selling Pitcher & Piano as part of a group of 170 outlets which also includes the Varsity student pubs.
While defending itself against a hostile Pubmaster takeover bid in July, the brewer claimed it would raise £121m through disposals.
The cash is to help it pay back some £200m to shareholders over the next two years.
Part of W&DB's defence against the Pubmaster bid was a promise to return money to shareholders through the sale of various subsidiaries like the Pitcher & Piano chain.
The promise helped it to win the fight against Pubmaster, with 53 per cent of investors voting to remain independent, in one of the closest takeover battles of recent years.
The board is certain to lose credibility with investors if it fails to generate what the City would consider a satisfactory price for Pitcher & Piano.
Last week chief executive and finance director Ralph Findlay bought 5,000 shares at 478p in an attempt to generate confidence within the Square Mile. The outlay of £26,290 takes Mr Findlay's holdings to 15,000 shares.
Related stories:
Regent Inns "cuts price" in bid for Pitcher & Piano (24 August 2001)
Pubmaster fails to buy W&DB (13 August 2001)
Regent Inns buys 3i-backed bar operator (11 July 2001)
Regent rumoured to be buyer of Pitcher & Piano (09 July 2001)