For TDR the price was right

Just as I went into print last week musing on the length of time it appeared to be taking Mitchells & Butlers (M&B) to sell the package of those pubs it had identified as being non-core to its business, M&B announced it had sold the package of those pubs it had identified as being non-core to its business.

Typical. Anyway, the deal to sell 333 wet-led, high street community and late night pubs to TDR Capital - a private equity outfit founded by Manjit Dale and Stephen Robertson, two of the people who helped put Punch Taverns on the map 13 years ago - illustrated that when the price is right there can​ an appetite to buy large numbers of pub sites, even in this downtrodden sector.

It was the first such 'big' transaction for quite literally years, unsurprising in a market where you can't borrow a pen from a bank these days, let alone money to buy a boozer. It may be the only such deal this year. We'll have to wait and see.

But, and it's been said before and not just by me, a number of private equity and venture capitalist outfits have been sitting on piles of their clients' cash for some time and eventually something had to give.

For both sides, the £373m price was right. M&B got a chunk of money for pubs it said it no longer wanted, which it can use to pay down some of its debt and plough into creating food-led operations within out-of-town shopping parks and the like.

And for £373m - a EBITDA multiple of just over seven times and at a 15 per cent discount to the net asset value of the businesses - TDR has got a large chunk of assets which it will either continue to trade, perhaps in a new format, or sell on to other operators or developers.

It is too early to say quite what Stonegate Pub Company, the group TDR created to run the sites, has up its sleeve. The wet-led, community and late(r) night sectors have been having a rough time, but in the right hands who knows what the sold pubs could do?

For now TDR is keeping schtum on exactly who will head up Stonegate, although it has been suggested in some quarters that Ian Payne, former Laurel Pub Company boss and now chairman of Town & City Pub Co and Bay Restaurant Group, might be in the frame.

Meanwhile the GMB union has laid into the deal, highlighting the Punch Taverns connection and warning staff at the soon to be ex-M&B pubs to fear mightily for their jobs.

Where a company screws up relations with its employees a trade union has every right to wade in, but the GMB's pronouncement on the deal smacked somewhat of opportunism. Membership campaign anyone?

That said, we trust TDR/Stonegate will, and in a timely fashion, keep the pub's employees fully informed of their plans…