Enterprise Inns this morning announced it was going ahead with the acquisition of the Unique Pub Company, a deal that will put it back as the UK's biggest pub owner.
Enterprise bought a 16.8% stake in Unique in March 2002 with an option to buy out the venture capital firms who acquired the rest of the company, Cinven, Morgan Stanley and Legal & General Ventures within two years at a price of £609m.
Today, as expected, Enterprise said the purchase will be financed primarily from new borrowings, with only £50m coming from the proceeds of a share placing made last week to satisfy credit rating agencies.
It will put Enterprise's approximately 5,080 pubs together with Unique's 4,080 to create the biggest holding of tenanted outlets ever seen in the UK, pushing Enterprise back past Punch Taverns to the number one spot and giving it around 15% of all pubs in the UK.
Enterprise said it would be seeking clearance from the OFT for the merger. Meanwhile, "to avoid potential competition issues", it was taking steps to sell off pubs after the deal is completed to reduce its holdings to less than 25% of the pubs in any one district.
The company declined to say this morning how many pubs that might involve, or where the sales would be taking place. However, previous estimates from Ted Tuppen, Enterprise's chief executive, have suggested a figure of around 300 pubs that will need to be sold.
In the year to September 30 2003 Unique made operating profits of £228.4m and profits before tax of £61.7m on net assets after debt of £196.1m. Enterprise said the enterprise value of Unique as a whole was approximately £2.3bn, including £1.7bn of securitised debt, and it expects Unique's ebitda in the year to September 2004 will be at least £235m before synergies. Enterprise Inns' current market capitalisation is £2.2bn.
The deal is conditional upon the approval of shareholders at an extraordinary general meeting to be held on March 30.
