Capital Pub Group buys Tomahawk for £5m

Capital Pub Company, the London pub operator, is set to buy Tomahawk, a rival pub group, for £5.03m in cash.

The deal will be part-financed by the placing of 2.8 million shares in Capital, priced at 103p each, to existing shareholders.

Tomahawk, funded by private equity via an Enterprise Investment Scheme, owns two managed pubs: the Black Swan in Ockham, Surrey, and the Morgan Arms in Bow, East London.

The pubs had been run by Geronimo Inns, and this arrangement has now been terminated. Staff at both pubs will transfer into the employment of Capital, the group said today.

Capital said that for the 44 week period to May 2, 2010, the combined turnover of Tomahawk's two pubs was £2.1m, versus £1.9m in 2009. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose from £404,649 to £551,854.

James Bruxner, Capital's chairman, said his company had been actively seeking to grow the business through the acquisition of further freehold pubs.

"Tomahawk's two pubs - the 'Morgan Arms' and the 'Black Swan' - are well located freeholds which will fit well within our estate. Under Tomahawk's ownership, the pubs have developed a quality offering and a significant trading track record."

Bruxner said Capital hoped to be able to build on this success. "We believe this offer represents a fair value for the business in the current market."

John Harding Jones, Tomahawk's chairman, said the sale price was a fair one "in very difficult market conditions.

"I believe our pubs will continue to thrive and serve their communities under the Capital Pub Company and wish them every success in the future."