Pub deals back on the cards
15 May, 2011
Investment deals for pubs are picking up again after a spell in the doldrums, the Telegraph reports. “Investing in Britain’s pubs in recent years has been about as much fun as a bar-room brawl,” says the paper.
But there is now “a mini-revival in pub deals after a dearth in activity since the credit crunch.”
It points to deals like Greene King’s acquisition of the Realpubs group, Young’s move for Geronimo and rumours that RBS is about to sell more than 900 freeholds. The Grand Union group has meanwhile appointed advisors following several approaches from private equity outfits. And there’s a good reason for all these deals, especially in London. “Although economists are predicting a world of pain yet to come for UK consumers, in the last six months pubs have been out performing the British retail sector by a considerable margin.”
Banks have started to think that a new era of deals is dawning—though it is still nothing like the glory days, the Telegraph adds. “These are virgin mary deals compared with the double shot tequilas and the flaming Ferraris served up in the heady days of op co / prop co pub estates.”
Those days led companies like Punch to over-reach themselves, leaving current chief executive Ian Dyson with a major rescue job on his hands. “Rival pub chains, such as JD Wetherspoon and Greene King, have fared far better with much more conservative business models. But it's around the forced sales that went with the credit crunch, such as the various Punch portfolios, that the recent uptick in M&A in the sector can best be explained.”
There are more tough times ahead, the paper concludes. “With consumer spending still suffering, only a bar-room optimist could be confident that there won’t be more fisticuffs to come.”
For the full story, see Expect more bar-room brawls as banks dream of deals.