Fuller's responds to Capital Pub Co rejection
Fuller's has responded to Capital Pub Company's rejection of two takeover approaches, claiming further expansion of the business would "dilute the overall quality and attractiveness of the estate."
The brewer responded after Capital unveiled positive financial results and claimed the Fuller's offer undervalued the business.
Fuller's moved to clarify its offer of 200p per share, claiming the EBITDA multiple of the offer was favourable compared to other recent deals. In a statement, Fuller's said: "Fuller's possible offer values Capital at 9.3x FY11 house EBITDA. This compares favourably to the implied forward multiple paid by Greene King for Realpubs, where freehold assets comprised 93% of its estate, of 8.4x next year's house EBITDA (source: Greene King acquisition announcement, 27 April).
"Regarding the comparison to the Geronimo Inns acquisition by Young's the acquisition was announced in December, almost six months following Geronimo's year end. Whilst the implied historical multiple for the year ended June 2010 was 9.8x house Ebitda, the implied multiple for the year ended June 2011 was 7.3x house EBITDA." (Source: Young's acquisition announcement, 16 December 2010)."
Fuller's questioned the group's growth strategy in the statement. "It has taken Capital over 10 years to grow its estate to 34 pubs and Fuller's believes that the strategy to grow the estate by a further 11 to 16 pubs (which represents a 32 to 47% increase in the estate) over the next two years has considerable risks associated with its execution which could dilute the overall quality and attractiveness of the estate and which could have a negative impact on valuation over time."
