Greene King to buy Capital for £93m
Greene King has agreed a deal to buy the 34-strong London-based Pub Company for £93m.
The Suffolk-based brewer and pub operator has stepped in to offer 235p a share — a premium of 51% on the closing price of 155.5p on 16 June. The offer values the company at £70m and implies an enterprise value of £93m.
The offer pulls the rug from under Fuller's hopes of securing a deal for Capital. It had been given until 5pm on 1 August to make a firm offer or walk away.
Fuller's had previously had bids of 175p and 200p a share turned down.
Capital's Board has agreed unanimously to recommend that shareholders accept the offer, which is inclusive of the final dividend of 2.25p per share.
The offer will be financed out of Greene King's existing cash resources and credit facilities.
Greene King believes the acquisition will provide a good fit with its recent £53.1m acquisition of the 14-strong Realpubs chain in London. It will now have 250 pubs in London. It sees there are opportunities to grow food and accommodation within the Capital estate.
The Capital deal is expected to be earnings enhancing to Greene King in the first full year of trading and will generate returns above Greene King's cost of capital in year one.
It is not currently anticipated that the full Capital Pubs management team will remain in place although discussions between Greene King and Capital Pubs' senior management about team members' specific roles in the enlarged group, and the terms of their employment, have yet to take place.
Cultural fit
"The proposed acquisition represents another firm step as we continue to expand our presence in London," said Greene King chief executive Rooney Anand.
"Capital Pubs would bring a further 34 premium pub assets and take our Greater London estate to approximately 250 at a time when London is outperforming the national pub market.
"This offer represents a fair price for a high quality, largely freehold pub estate. Capital Pubs is a premium London pub company that fully meets our criteria as we continue to progress our retail expansion strategy.
"Capital Pubs' estate fits well within the Greene King portfolio and we intend to combine it with our recently acquired Realpubs business, thereby generating attractive cost and revenue synergies."
Clive Watson, chief executive officer of Capital Pubs, said: "Greene King is an excellent cultural fit with Capital Pubs and will be a good home both for the business and for our staff.
"Greene King is renowned for nurturing the businesses it acquires and I have every confidence that Capital Pubs will continue to develop under its ownership.
"We have recommended Greene King's deal to shareholders as we believe it reflects both our high quality business and its prospects."
