Wolves set to bid farewell (at last)
By Andrew Sangster
The final chapter of the long-running battle for Wolverhampton & Dudley Breweries seems at last to be nearing an end. It officially began way back last August when Wolves announced it had received an approach from Robert Breare's Noble House Leisure, backed by venture capitalist Botts & Co. And it is now set to climax within a month in a £1bn takeover.
Breare's tactic of not going hostile both avoided pushing up the price too high and helped ensure sufficient information could be gleaned to prevent a costly mistake. But it has also allowed rivals plenty of time to assess the situation as well. Witness the arrival into the tussle of Pubmaster in January. Still unclear is what has happened to the rumoured management buy-out being tabled but it seems unlikely that this will find much favour with investors given that the management has so clearly failed to deliver in the recent past.
Everybody is also keeping tight-lipped about their business plan for the 1,700 pubs and four breweries that are set to fetch over £1bn. What rumours have leaked suggest that Breare has lined-up Greene King for some pubs while Pubmaster is doing the same with Enterprise Inns. Very little, however, is emerging about the breweries and these look to have an extremely gloomy future. Even the existing management was planning to close at least two.
The bid process is set to see at least 500p per share paid (£472m in total) up to as much as 550p (or £519m). At the end of 2000, group debt stood at £551m. This means the total price paid for the group is likely to be in excess of 10 times the £105.5m operating profit before amortisation of goodwill reported for the year to September 30.
This looks to be an exceptional multiple given recent transactions such as Whitbread's disposal to MGPE of 3,000 pubs for £1.625bn. The earnings before interest and tax for this division were £173.9m, giving a multiple significantly below the Wolves price despite the better quality of the Whitbread estate. While clearly these deals are far from comparable, the current price being mooted should be sufficient for Wolves shareholders to make a swift exit.
By Andrew Sangster
The final chapter of the long-running battle for Wolverhampton & Dudley Breweries seems at last to be nearing an end. It officially began way back last August when Wolves announced it had received an approach from Robert Breare's Noble House Leisure, backed by venture capitalist Botts & Co. And it is now set to climax within a month in a £1bn takeover.
Breare's tactic of not going hostile both avoided pushing up the price too high and helped ensure sufficient information could be gleaned to prevent a costly mistake. But it has also allowed rivals plenty of time to assess the situation as well. Witness the arrival into the tussle of Pubmaster in January. Still unclear is what has happened to the rumoured management buy-out being tabled but it seems unlikely that this will find much favour with investors given that the management has so clearly failed to deliver in the recent past.
Everybody is also keeping tight-lipped about their business plan for the 1,700 pubs and four breweries that are set to fetch over £1bn. What rumours have leaked suggest that Breare has lined-up Greene King for some pubs while Pubmaster is doing the same with Enterprise Inns. Very little, however, is emerging about the breweries and these look to have an extremely gloomy future. Even the existing management was planning to close at least two.
The bid process is set to see at least 500p per share paid (£472m in total) up to as much as 550p (or £519m). At the end of 2000, group debt stood at £551m. This means the total price paid for the group is likely to be in excess of 10 times the £105.5m operating profit before amortisation of goodwill reported for the year to September 30.
This looks to be an exceptional multiple given recent transactions such as Whitbread's disposal to MGPE of 3,000 pubs for £1.625bn. The earnings before interest and tax for this division were £173.9m, giving a multiple significantly below the Wolves price despite the better quality of the Whitbread estate. While clearly these deals are far from comparable, the current price being mooted should be sufficient for Wolves shareholders to make a swift exit.
