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— Dealmakers —
 U.K. pub groups don't stay out of dealmaking headlines for long. Debt-ridden pub and restaurant group Mitchells & Butlers plc and hotel and fitness club operator Whitbread plc struck an asset swap July 31. For erstwhile takeover target M&B, the deal marks a small step toward a portfolio overhaul, The Deal's Laura Board wrote. "Whitbread will take 21 Express by Holiday Inn hotels with 1,245 rooms from Mitchells in exchange for 44 pub-restaurants," she explained. "The companies valued each set of assets at £78 million." Birmingham, England-based M&B said it would rebrand the pubs as its own and seek out sale-and-leasebacks to help fund the remodeling. Property tycoon Robert Tchenguiz's R20 Ltd. is a nearly 26% M&B stakeholder, and the investor has been pushing the company to capitalize on its real estate assets. The two had teamed on a real estate deal in 2007, which was scrapped after debt markets imploded. Meanwhile, M&B and rival pub group Punch Taverns plc seemed for months to be entangled in a curious game of cat and mouse.
In pursuing a deal with Punch, M&B said April 14 it was considering
turning to PE investors who had in fact been gearing up for a possible investment in
M&B. As recently as April 10, sources confirmed for The Deal's Jonathan Braude that Blackstone Group LP and
CVC Capital Partners were working on an indicative bid for a minority
share of M&B.
Permira Advisers LLP also made an offer for a stake worth up to 29.9%
of M&B, and Bain Capital LLC was also thought to be in the running. Back in January, Punch indicated it might get back on the M&A wagon and that it was talking with M&B, five months after it said it was considering its own strategy.
The company, which has the most outlets in the U.K., had been talking
with M&B over a deal that could have yielded a $22 billion company.
Mitchells on Jan. 29 reported
a £274 million ($541 million) loss from closing hedges related to its
abandoned real estate joint venture, effectively putting itself on the
block, Board noted. (CVC, TPG, Cinven, Permira and Blackstone, many of whom have dabbled
in this area, as well as Tchenguiz, were also named as possible suitors in press
reports.) A Punch-M&B deal, Board wrote, would have followed "well over a decade of asset-churning among U.K. pub operators as many of them exit brewing and focus on selling more food in upscale outlets." Punch began in 1997 after the acquisition of Bass plc's leased pub portfolio. The target would have added 2,000 owned and managed outlets to its own 8,400. For 2007, M&B had sales of £1.9 billion, slightly above Punch's £1.7 billion. Mitchells traces its inception to 2003, when Six Continents plc split in two. Six Continents' predecessor was Bass plc, which changed its name after selling Bass brewing interests. Punch in September 2007 said it was weighing its options. The company signaled it could spin off its Spirit managed pubs business, make an acquisition or orchestrate a cash payout to shareholders as it credited poor weather and flooding for hammering its pretax profit for the year ended Aug. 18, saying it would come in 2% to 3% lower. Spirit consists of 888 pubs, most of which Punch picked up with is $5.4 billion deal for Spirit Group Holdings Ltd. in January 2006. Punch itself has another 7,561 leased pubs. In April 2007, the pub group said it would sell 869 leased and tenanted pubs to privately held Admiral Taverns Ltd. for $653 million. PUNCH DRUNK The September 2007 news came a year after Punch acquired the 82 Mill House Inns Ltd. pubs from Bank of Scotland plc for £169 million ($343 million). Also in 2006, Punch handed $1.1 billion worth of pubs to Menlo Park, Calif., buyout shop GI Partners, while it was digesting Spirit Group. The company saw a flurry of activity in the years before. In buying Spirit, Punch gulped down 1,808 watering holes from TPG, CVC, Blackstone and Merrill Lynch & Co. and became the largest operator in the U.K. It announced plans May 22, 2006, to divest 380 pubs with expectations of reaping an undisclosed amount, some of which might fall into the "golden brick" category, where outlets are more valued for the land upon which they sit than their business as pubs, a company rep told The Deal. The 29 that were initially divested fell into that category.
PUB CRAWL In this business, the same people keep showing up.
MEASURED RESPONSE Punch floated in London in May 2002 at a reduced price just two weeks after postponing its public debut, first announced that April. The pub operator was once a portfolio company of TPG Capital until the Fort Worth- and San Francisco-based buyout firm unloaded its remaining 21.8% holding in December 2003, which sent its stock plunging. TPG also wasn't the first, or the last, firm to cash out of British pubs.
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Good Morning
We are a company who supply outdoor awnings and giant umbrellas to the
hospitality trade.I would like to send some literature to the person who would deal with
this.
Perhaps you could let me have a name.
Many Thanks