Having led W&DB through Pubmaster's attempted takeover, Ralph Findlay now faces the task of restoring confidence. He talks to Mark Stretton.
When Pubmaster joined up with Robert Breare to launch a hostile bid for Wolverhampton & Dudley Breweries (W&DB), to most minds the company was consigned to the history books - it would be bought-out, broken up and lost forever.
The bid was backed by Robin Saunders' principle finance group from West LB, one of the most aggressive, acquisitive teams in Britain. It seemed incomprehensible that the deal would escape the consortium's clutches.
But Wolves was the one that got away. A fierce and closely fought takeover battle ended in victory for the Midlands-based brewer and pub operator.
Its management had successfully argued that the company was worth more than 513p-a-share but many investors say Ralph Findlay, chief executive (pictured), has a year to justify the shareholders' support.
As both Robert Breare and Ralph will testify, the pressure surrounding such a bid is about as intense as directors' business lives get.
But for Ralph it was the culmination of a feverish two year period of corporate activity that started with W&DB's hostile takeover of Marston's in 1999 and ended with the defeat of the WestLB-backed Pubmaster consortium.
Ralph says that he now knows more about takeover rules and the City than he ever wished to.
The takeover consortium launched a bid at 480p-a-share and then went to 513p-a-share (valuing W&DB at £485m). "Our chances of success were clearly dependent on the offer price," said Ralph. "I always felt both prices were defendable."
One of the main problems that W&DB faced was the daily news flow surrounding the bid. As a private company Pubmaster was not governed by the same regulations that applied to W&DB, a publicly listed firm. The Pubmaster PR machine at Brunswick kicked in and at one point was said to be churning out eight stories a day. "It was like firing bullets at a speeding juggernaut," said Ralph. "They were releasing story after story about how they were winning the battle and our reply simply had to be 'no comment' - it was very frustrating."
Ralph says he knuckled down to a gruelling schedule of visiting investors - the people who would decide - to get his message across. During the defence he recalls journeying from Wolverhampton to London and back again on several occasions, only to have to return to the City again for another meeting, all in the same day.
Robert Breare recently spoke at this year's Publican Conference of the need to win "hearts and minds" in any successful takeover bid. Unfortunately for the Pubmaster consortium, it was Ralph and his management that seemed to win the hearts and minds on this occasion.
The City has been impressed by Ralph's no-nonsense approach. One analyst, from NM Rothschild, who advised W&DB during the bid, said at the time: "He is a very impressive chap, a very clear thinker and a clear presenter - straightforward and effective."
His refusal to be drawn into anything personal, as so often happens, was also regarded as a notable quality.
The Pubmaster Consortium maintained it was investor apathy that failed the bid - two large institutional investors did not vote because they believed the takeover was "in the bag".
The W&DB version is somewhat different. "That's absolute rubbish - this is trotted out all over the place," said Ralph. "What else are they going to say? They lost the bid."
But the pressure has not gone away. Robert Breare has said he may bid again in a year's time, when the rules allow. Some analysts believe W&DB is living on borrowed time.
It is a challenge Ralph readily accepts. The company had to issue a defence document outlining its strategy going forward. Investors were promised a £200m share buy-back which would mean they would see a cash return in the near future.
Ralph said he would raise £65m of that through disposals and about £45m of this is already banked. Wolves is looking to dispose of its Pitcher & Piano high street bar brand to concentrate on community-focused pubs. The company was recently in talks with Regent Inns, which tabled a £62m cash bid for the chain.
Stories differ as to why the deal did not happen. Regent says Wolves didn't like its offer, Ralph says Regent walked away. "I don't feel any pressure to sell Pitcher & Piano," he said. "It's a good brand, a good performer and we don't need the money."
Then why put it up for sale at all? "We know community pubs," he said, "they are our focus, our core business. The markets are totally different. Pitcher & Piano is on the high street, it's crowded.
"There is a certain monopoly value with community pubs - you have the licence for an area."
The Campaign for Real Ale (CAMRA), which opposed the bid, claimed W&DB's diversion from its traditional strategy was what went wrong in the first place. "It should have concentrated on producing good quality beer and managing local pubs - not fancy in-town pubs," said a CAMRA spokesman. The group managed to drum up 8,000 people to oppose the bid.
The W&DB management also argued that the share price had some way to travel and that 513p was not enough. "We had a good track record - we have outperformed the FTSE all-share by 10 per cent over the past three years," said Ralph. "At the time, share prices of multiples such as us and Greene King were flat on the floor. Clearly there was a big upside."
While the W&DB price has so far failed to break the 500p barrier, it has stood firm. Many believed it would drop below the 400p mark if the takeover did not go through.
Ralph also made it clear that the frowned-on mixture of breweries, tenanted pubs and managed pubs would be run separately, streamlined and invested in.
"Pubmaster tried to paint us as old-fashioned and brewery-led, but we were able to demonstrate that was not the case.
"We are not a vertically integrated company either," he said, "About 65 per cent of our beer brands trade outside the group and I want to get that to 80 per cent." As part of the streamlining process, the company will close two of its four breweries. The Mansfield brewery will close in December and the company is currently conducting tasting tests in Hull and Wolverhampton for flavour matching.
Since 1998, the company has sold 800 pubs. Its tenanted arm, The Union Pub Company, has 1,087 pubs. Managing director Stephen Oliver says that this will ideally be reduced to 1,000 as the company seeks to improve its estate.
In those three years the average weekly turnover of the group's 550 community pubs has moved from £4,500 to over £8,000.
Ralph says there is still work to be done. He wants more of what he describes as "Boston locals". "The term basically means brilliant locals," he explained.
"We find big under-developed pubs with large gardens where the customer base hasn't changed for 10 years, and make a substantial investment to raise the profile of the place."
The W&DB management has set aside £80m over five years for 200 more Boston locals.
It also owns well-known beer brands such as Pedigree and Mansfield, as well as Banks's, which is hugely popular in the Midlands. The company will spend £5m marketing Pedigree this year and recently entered a two-year sponsorship deal with Premiership football club Derby County, at a cost of £800,000.
Ralph says he will also be paying attention to the image of the company. W&DB was recently voted among the least admired companies in Britain according to a survey. "When that survey was conducted many did not believe we would be here for much longer," he said. "But now we have a chance to look outward and we intend to address our image."
That the company found itself in the image-tarnished company of Railtrack and the insolvent Independent In