Punch confirms sale of 290 pubs for £570million

Punch Taverns has confirmed the sale of 290 former Spirit pubs for £571million to US firm GI Partners.

GI Partners is understood to have beaten off competition from Robert Tchenguiz's R20, Wolverhampton & Dudley Breweries and Alchemy Partners in the final round of bidding.

The price is well above initial estimates of about £500 million when the package was put up for sale in April.

GI is best-known in Britain for taking the Yates pub company private in July 2004 in a £154 million deal, then selling it to Mr Tchenguiz nine months later for about £202 million.

Giles Thorley, Chief Executive of Punch, said: "The transaction represents the first major disposal by Punch following the acquisition of Spirit in January 2006 and is wholly in line with our strategy to streamline the managed house business whilst converting a further 740 pubs to our core leased estate."​

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Your Comments​Robert Feal-Martinez​ via email 08/06/2006"Could someone please explain to me how these pubs can be worth approximately £2Mill each. If they were such high performing pubs that their value is that high, and given that Punch say they will stay in management surely this offload makes no sense, unless of course Punch's banks have woken up to the fact that the majority of their tenanted estate is not worth the £500K price tag Punch put on them and is rightly concerned that they are effectively insolvent. More importantly what are GI going to do. One assumes they will keep them managed like Yates, this leads to the conclusion that Punch needs to clear debt."

Graham Allman​ via email 09/06/2006"Robert ,good point , how can the outlets be worth £2m each ?. This can only be calculated by wayof PE value ie a multiple of profits earned.To value to £2m it would indecaite a profit level of circa £140k per unit , that is if they are using a top multiple of 14 x earnings however a much safer multiple would be 12 x earnings which would mean the outlets are providing £165k disposable net profits which is quite credible for well sited and compitently managed outlets. A bigger concern is the transfer of managed houses to the core leased estate at nil premium which is "stalling" the lease assignment market and will do so untill they have all been let. On the "upside" the market will be that much bigger with more choice for prospective lessees. As they say "every cloud has one!"

David ​ via email 09/06/2006"I believe they are planning on keeping a small number of managed pubs for the medium term because it protects them from competition rules. they are therfore still allowed to make purchases of pubco's and convert without the Monopolies & mergers Commission getting upity.

However it was also apparent that when they announced they were keeping a small managed estate a few weeks back their shares fell - which indicates the 'city' isnt that keen on Punch maintaining a estate with a much higher cost base. We all know that a listed company's priority is shareholders so i think within 18months Punch will have or be making plans to dispose of the remaining Spirit estate."