Pub company Mitchells & Butlers' (M&B) £500m takeover of Whitbread's pub-restaurant sites is the toast of pub sector analysts, who believe the group has plumped for the right deal.
Last week M&B announced that it had beaten off the competition, thought to have included private equity firm GI Partners and the Laurel Pub Company, to seal the deal on 239 pub-restaurant sites for £497m.
Commentators believe it makes sense both as a property play and as a signal of ambition, after Laurel owner Robert Tchenguiz's unsuccessful bid for M&B in May.
"There's a lot of sense to this deal, and it was the one they needed to do," said James Shorthouse, director at property agent Christie & Co. "These are generally good sites that, with investment and reinvigoration, can be revitalised."
Nigel Popham, director at stockbroker Teather & Greenwood, agreed. "These are good properties in good locations," he said, "and M&B has enough brand flexibility to avoid any loss of sales in areas of overlap."
M&B plans to convert the majority of sites over two years to brands such as Premium Country Dining, Toby Carvery, Vintage Inns, Ember Inns and Sizzling Pub Co. It is thought likely that M&B's Project S, a food-led country pub brand, could also benefit.
James Dawson, analyst at Charles Stanley Securities, said the move made sense with the English smoking ban on the horizon. "If you want to grow your pub operation, it's the only way to go," he said.
Whitbread is keeping more than 350 dual sites that combine pub-restaurants such as Brewers Fayre with its budget hotel brand, Premier Travel Inn.
Key deal facts
- Total cost £497m cash
- Involves 239 Whitbread-owned restaurants around UK
- Includes Predominantly Brewers Fayres and Beefeaters
- When Should complete by 28 July
By Chris Druce