Punch shareholders have overwhelmingly backed the Patron/Heineken bid to acquire the company in a deal valuing the UK’s second biggest pub company at £1.8bn.
In total, 99.6% of shareholders voted in favour of the offer.
In separate statements, Heineken and Patron both said they were “delighted” that Punch shareholders had voted in favour of the scheme.
The deal will now be passed over the Competitions and Markets Authority for an investigation which is expected to last until the summer.
Patron and Heineken, under the banner of Vine Acquisitions, had a bid of 180p per share accepted by Punch’s principal shareholders and board in December. It’s only rival – Emerald Investments – led by one of Punch’s founders, Alan McIntosh – decided last week not to progress with 185p a share bid.
The Vine bid values Punch’s share capital of £402.7m and represents a premium of 40% on the closing price on 13 December – the last business day before the group’s interest was made public.
Punch deal: What happens next?
Punch’s shareholders have given the green light to Patron/Heineken’s bold bid to take over the UK’s second biggest pub company.
While this is undeniably a huge moment for all the companies involved and for the 3,200 licensees across the country, it is far from the final hurdle.
The deal will now be handed over to the Competition & Markets Authority for scrutiny, with a decision expected in June/July.
A transitional period will then begin in which Patron Capital will operate the entire 3,200-strong estate for up to nine months before selling 1,900 pubs to Heineken and retaining the rest of the estate to operate itself.
The move means that Heineken – which already operates 1,049 pubs in its Star Pubs & Bars estate – would go from the country’s seventh to third biggest pub group (depending on the size of Greene King at the point Heineken takes on the pubs) and would own 6% of UK pubs. Patron – which is being assisted May Capital which backed the launch of Hawthorn Capital – would become the sixth biggest pub company overnight.
As to the immediate effect of the so-far successful bid, it seems the old adage of “business as usual” is in play.
Punch’s chief executive Duncan Garrood has insisted that the company’s strategic plans remain unchanged, with 150 pubs a year being converted to its Falcon retail contracts division, the continued growth of its operating formats and the work being undertaken to strengthen the former non-core pubs in its Mercury estate. Given that discussions with its Dutch suitors have been underway since June – in which time Punch has continued to rapidly evolve - there’s little reason to doubt Garrood.
The question is over the end game for these strategies and how much enthusiasm Heineken and Patron share for them. The pubs being divided up between the two are split along the A and B debt securitisation lines, with Mercury, Falcon and the group’s various formats running across them. It will be interesting to see if there are further deals between the two sides to bring those divisions under one owner or whether they will be parcelled up for sale or simply discontinued. This would obviously have ramifications for the management teams – both at Punch and Heineken.
Heineken will be keen to immediately curry favour with Punch tenants and has already made overtures this week by unsurprisingly insisting that operators will still have a wide range of drinks choices. Expect further paternal pronouncements from Star’s Lawson Mountstevens about the benefits of joining the Heineken family.
The group will have been relieved by the assurance from the pubs code adjudicator’s office this week that the takeover would not in itself be a blanket trigger for the Market Rent Only option. However, expect the anti-pubco campaigners, led by the ever excitable Greg Mulholland, to have some strident opinions on the deal. Oddly, their argument may well be that tenants were better off under Punch – a body they have heaped vitriol on for the past decade.