Spirited Punch likely to sell off 1,000 pubs
by The PMA Team
Punch Taverns boss Giles Thorley has indicated at least 1,000 pubs are likely be sold by the company in the wake of its acquisition of Spirit Group for £2.68m last week.
The tenanted operator is set to become the UK's largest pub operator with 9,500 sites after the deal. Around 750 lower-turnover Spirit pubs, turning over less than £10,000 a week, will be converted to tenanted and leasehold in the next two years.
Punch will undertake a performance review of the remaining 1,100 Spirit pubs, which will continue to be run by the Spirit team headed by Karen Jones.
Thorley has not ruled out the possibility of retaining a managed arm at Punch in the long run. But more likely is that Punch sells many of the high-turnover pubs to managed operators such as Mitchells & Butlers, Greene King and Wolverhampton & Dudley.
On the morning the deal was announced last Thursday, Thorley said he was already receiving e-mails and text messages from other operators asking about deals. And asked if Punch's eventual size would be around the 8,500-pub mark, Thorley said: 'Maybe slightly less than that.'
The news that Punch has bought Spirit took many by surprise. Thorley himself had been telling industry contacts that he thought a rival bid from property tycoon Robert Tchenguiz would win the auction. He heard Punch had won last Tuesday morning at 8am.
'We bided our time and never got carried away, but it came very much as a surprise. I rang our lawyer and adviser and they didn't believe me. Spirit is a great business - people forget what good quality Spirit is.'
Thorley thinks Punch's bid was favoured in the end because of greater certainty over its timetable for completion.
The Punch boss and Tchenguiz were both guests of Scottish & Newcastle on a visit to Russia the weekend before the auction. But Thorley insists there were no late-evening chats about the Spirit deal.
'We decided it was not appropriate to discuss it.' Tchenguiz claimed his bid was rejected because he wanted greater clarity on some pension issues.
Tchenguiz told The Daily Telegraph: 'We bid higher than them, but we wanted them to meet some pension issues, but that would take two to three weeks and then Spirit decided they wanted to do the deal sooner rather than later.'
Punch has also sold 200 bottom-end pubs to Admiral Taverns for £40m, a deal that would have happened regardless of the outcome of the Spirit auction. Admiral Taverns now owns 815 pubs.
Owners to net £750m profit
Spirit's private equity owners Texas Pacific, Blackstone CVC and the private equity arm of Merrill Lynch will make a £750m profit from the Punch sale. Spirit's management team also owns a stake in the business, with chief executive Karen Jones' stake worth upwards of £20m. Punch will pay Spirit a break fee of £19.5m if shareholders do not approve the deal by 31 January.
