London based pub operator and brewer Young's has acquired the 26-strong Geronimo Inns for £60m in cash.
Geronimo was founded in 1995, by Rupert and Jo Clevely with backing from Penta Capital, and has 22 high quality food-led pubs in Central London, three at Heathrow and one in Surrey.
The estate comprises of 10 London freeholds, 13 leaseholds and three concessions.
Geronimo's pubs have a current average weekly turnover of £23,000 with food accounting for 40% of sales.
Rupert Clevely will be joining the Young's board as an executive director with immediate effect as managing director of Gernonimo.
Jo Clevely will continue to drive design strategy which is integral to the Geronimo format. The management team of Geronimo will also be staying with Young's as it looks to take advantage of Geronimo's experience of operating in high footfall locations such as Heathrow and St Pancras.
It believes Geronimo's experience can help it increase the rate of its new site openings. A separate operating team will be retained to focus on the rollout of the Geronimo format.
The deal increases Young's managed estate by 20% to 148 pubs, taking the total estate to 247.
Finance
In the year to June 2010, Geronimo's pre-overhead EBITDA was £6.1m and is currently expected to deliver pre-overhead EBITDA of £8.2m for the year to June 2011.
Geronimo has overheads of approximately £3m and Young's expects to make cost savings of £1.5m through combining the two complementary businesses.
On a fully integrated basis, further savings of around £1m could be made, it believes.
The deal is being financed by a new £100m five-year bank facility with Royal Bank of Scotland and Barclays Bank, which replaces the previous £40m revolving credit facility.
"The acquisition fits very well with our expansion strategy which is focused on high quality, food-led, managed houses in the London area, a strategy that we will continue to pursue with both the Young's and the Geronimo formats," said Young's chief executive Stephen Goodyear.
"Geronimo's team also brings considerable expertise in the operation of leases and concessions in high footfall retail locations such as airports and shopping centres and this represents a new growth opportunity for us.
"I am particularly delighted that Rupert Clevely has agreed to join our Board and that his senior management team will be staying."
Perfect home
Geronimo chief executive Rupert Clevely added: "Young's is the perfect home for Geronimo and I am delighted that the Young's Board wants to continue to embrace and retain Geronimo's inimitable DNA.
"Key to our success is the entrepreneurial flair and individuality, proven food expertise and home-from-home hospitality for which Geronimo is renowned and which our customers will continue to enjoy.
"The continued involvement of my trusted team will ensure that Geronimo's unique spirit will be maintained and that the Geronimo footprint will develop alongside and as a complement to Young's as the combined business looks to expand both formats. "