Fuller's could be next bid target, says broker

Fuller Smith & Turner could be the next regional brewer to fall under the merger and acquisition spotlight, according to a City broker.

Charles Stanley Securities said it felt the Chiswick-based brewer would become a "prime target candidate" for a bid approach, following yesterday's announcement by Greene King that it had agreed to buy Hardys & Hansons.

As a result the City firm raised its recommendation on Fuller's shares from a hold to a buy.

In a note issued today, the broker said the synergies announced by Greene King - £5m - "may prove conservative based upon the group's track record of transactions to date and hence explains why such a price is being paid".

Greene King has agreed to pay £270m, plus a dividend, for the Nottingham brewer, which owns more than 260 managed and tenanted pubs.

The appeal of Fuller's, the broker said, would be the number of quality pubs the group owned.

Fuller's estate of 360 pubs, following last year's acquisition of Gale & Co, had a "good geographical focus and well recognised beer brands [and] this must make this stock a genuine target", it said.

However, some observers believe Fuller's is strong enough to resist any bid attempt unless a predator was prepared to pay a significant premium, which in itself would reduce the options for finding synergy benefits that would make a bid worth attempting.

A spokesperson for Fuller's said the group did not comment on such speculation.