Royal Bank of Scotland (RBS) is thought to be close to appointing a pub group to operate Merchant Inns, the pubs-with-rooms business set up by Robert Breare and Sir John Ritblat that was placed in administration late last year.
M&C understands that RBS is drawing up a shortlist of potential operators after inviting first round bids for a 3-year management contract. It is thought that an agreed proposal will include some form of option to buy the business outright at the end of the contract.
More than 10 companies are believed to have expressed an interest in taking on Merchant in a process handled by CBRE, the property specialist. The next stage of bidding will see a handful of companies taken further in negotiations before RBS selects its preferred partner.
The business, which comprises six sites, currently sits in RBS’s West Register subsidiary – a special division set up to house distressed businesses that the bank thinks it should retain because of the possibility of some form of value recovery.
Interested groups are said to include “all the usual suspects” like Greene King and Marston’s. It is thought that Pebble Hotels, the fledgling hotel group set up by Ted Kennedy, is also one of the bidders.
Administrators at Deloitte were appointed to Merchant in October last year amid talk of financial irregularities – and after a major falling out between Ritblat and Breare.
They teamed up in October 2007 to buy Merchant, forming Kamside, an investment vehicle, to purchase the five-strong portfolio for about £20m, including £10m of debt, and later adding a sixth site.
Ritblat was for many years the driving force behind British Land while Breare is something of a serial entrepreneur having founded the Noble House business. He is a former investor in Jim Thompson’s and used to chair Individual Restaurant Company, the Piccolino operator.
The strategy at Merchant was to purchase pubs that could be developed into food-led propositions with a significant rooms business plus ideally conferencing and events facilities too.
One of its properties – the Horse & Groom Inn near Malmesbury in the Cotwolds – has featured in the top five of the Morning Advertiser's list of best pubs in the country. Merchant’s other properties are: the Lambert Arms in Watlington (Oxfordshire); the Talbot Inn in Ripley (Surrey); the Carnarvon Arms, Newbury (Berkshire); the Black Boy Inn, Banbury (Oxon).
The process is also thought to include one extra property that is also currently held in the West Register subsidiary.
