CI Traders looks to sell up for £230m

CI Traders (CIT), which operates around 70 pubs throughout the Channel Islands, has agreed in principle to sell up to a private investment firm for £260m.

CIT announced today it was backing a proposed acquisition of the company by a newly formed group called Sandpiper Bidco, which is owned by a number of investment fund managers including Duke Street Capital and Europa Capital.

The Channel Island group, which operates hotels and other retail operations as well as pubs, said it would be recommending to its shareholders that they vote in favour of the proposal, which it expects to become "effective in early August 2007".

A spokesman for Sandpiper said it hoped shareholders would approve the bid: "If and when that happens we will be focused on growing, investing and improving the whole business, which with 3,000 staff is the largest privately owned company on the Channel Islands."

A spokesman for CIT said staff were being kept informed of the proposals and their interests were being "looked after".

CIT has been the subject of bid interest for some time, the group having rejected an approach by private investment group Alchemy Partners in October 2005. Its shares leapt again late last year when rumours circulated of more bid attention.

The group recently announced its turnover across its pub estate for the year to January 27, 2007 rose 0.7 per cent to £29.4m, with pre-tax profits down 3.7 per cent at £2.6m.

Announcing the group's overall results recently, chairman Tom Scott noted that turnover from continuing businesses grew by 4.6 per cent to £333m in the year to January 2007 and aimed a swipe at the local authorities.

"Our operating results continue to be highly dependent on the Channel Islands' retail and leisure markets, which have not shown any measurable growth. The resident population levels in each island are tightly controlled by the respective authorities and the visitor market is generally in shallow but steady decline on many measures.

"At the same time as proposing to increase competition in the retail supply industry in a relatively fixed demand market, Jersey has also placed considerable cost burdens on businesses generally to carry out a substantial part of the tax gathering tasks as it implements its taxation strategy. The introduction of a Goods and Service Tax (GST) in Jersey in 2008 will not help the tourism sector recover.

"Furthermore, gathering payroll taxes and preparations for GST are already placing additional cost burdens which will inevitably be recovered in higher prices, as operating margins are already unsustainably low.

"Calls from representative trade bodies for tax gathering schemes to be kept as simple and low cost as possible appear to be ignored by those ministers who claim to be supporting the income generating businesses in Jersey.

"This is a sorry state of affairs altogether and we remain hopeful that wiser counsel will eventually prevail."