Wolves still wants to hunt down pub deals

Wolverhampton & Dudley Breweries (W&DB) is still in the market to do acquisitions, despite announcing last week it was intent on returning at least £100m to shareholders.

Speaking as details of the group's proposed share buyback were revealed, chief executive Ralph Findlay rejected the suggestion this meant W&DB was out the race for further deals.

He stressed that the group's strategy in the coming months would be focused around organic developments, such as new build pubs, although the group would consider opportunities as and when they arose.

"We're flexible regarding acquisitions," said Findlay. "We're in a very strong position balance sheet-wise and we've the capacity to gear up more than we've done in the past if we need to."

The group could fund deals in excess of £400m "without recourse to equity", he added.

Meanwhile the group is to spend "several hundreds of thousands of pounds" re-branding its 2,300-odd pubs as Marston's outlets.

The brewer announced last week it was changing its name to Marston's "to reflect the national spread of the business" when it revealed its annual results for the year to September 30 2006, showing sales up 7.1 per cent to £595.1m and pre-tax profits up 13.2 per cent at £101.5m.

It declined to say how much had been spent on consultants to arrive at the new-look logos and signage.

Findlay said there had "always been an issue with the name Wolverhampton & Dudley name" and the move to call the group Marston's would communicate the brand ideals of the brewer more effectively.

Around 30 to 40 'flagship outlets' have been identified as the first to be rebranded, while the job of changing the signage at all 2,300-plus of the group's pubs could take up to three years to complete. The move will mean an end to Bank's pubs, although Bank's beers will still be brewed.

W&DB finance director Paul Inglett added that the group was looking at the potential of becoming a Real Estate Investment Trust (REIT), but said it was "too early to say" whether it planned definitely to do so.

Current trading was strong, concluded Findlay, notably W&DB's Pathfinder managed estate, which was showing like-for-like sales since the year end of 9.1 per cent.

Hamish Champ, City & Business Editor, says: ​ "Forget the name change; what pleased many City types concerning W&DB last week was the not-exactly earth-shattering news that it would be returning £100m - at least - to shareholders in the coming year. This will surely come as welcome news to those investors who may have begun to wonder whether W&DB were in danger of being pipped to every regional brewer that came onto the market. Sure, it's not a numbers game, but with rivals stealing a march on you every time a 'for sale' sign goes up over an opportunity you gotta give 'em something.

That Messrs Findlay and Inglett make the point that they play a conservative game when it comes to doing deals and that recent prices have been too high to justify coughing up sounds sensible enough. However, with organic growth taking its time to come through, and with sales and profit growth levelling off a tad in a market already facing a tough time, share buybacks or not, it may find itself delving into its £400m war chest with considerably more vigour when the next family brewer decides to cash in its chips.

Everything else seems set fair though, with the Pathfinder managed pubs doing just fine and Union Pub Company's Stephen Oliver suggesting that the smoking ban in England and Wales should have no adverse impact on the group whatsoever. Confident-sounding stuff.

One thing puzzled me last week, though. Given its assertion that it gained nearly one per cent in the market for premium ale last year I was at a bit of a loss as to why WDB Brands boss Alistair Darby should refuse to say how its Marston's Pedigree brand had performed. He said that one had to be "careful" regarding the figures one did reveal, since there was a lot of inaccurate data out there in the market, a comment that meant his own tight-lippedness regarding WDB's flagship beer's trading spoke volumes of a different sort…"