London pub company Young’s has brought Penta Capital-backed Geronimo Inn for £60m cash, increasing the size of its managed estate by 20%.
The deal, revealed earlier this month, will see Young’s leveraging 26-strong Geronimo’s expertise in food (which accounts for 40% of sales at the group), as well as bringing advantages of further scale in regards purchasing and overhead savings (put at £1.5m after integration).
Geronimo also brings expertise in operating both leases and concessions at high footfall locations, with pubs at Heathrow Airport, St. Pancras International Train Station and the Westfield London Shopping Centre in Shepherd’s Bush.
Young’s added that while maintaining a high freehold mix remained important, the addition of this particular expertise would enable it to increase its rate of new site openings with attractive returns on capital.
As part of the deal Geronimo’s co-founder Rupert Cleverly takes an executive position on the Young’s board as managing director of Geronimo Inns. The deal boosts Young’s managed estate to 247 pubs, although Geronimo will retain its identity within the larger group.
The deal is being financed by a new £100m five year bank facility that Young’s has entered into with The Royal Bank of Scotland and Barclays Bank. This replaces the previous £40 million revolving credit facility.
Stephen Goodyear, chief executive of Young’s, said: “The acquisition of Geronimo, a business we have known for a number of years, represents an excellent opportunity to accelerate the growth of the Young’s managed estate.
“The acquisition fits very well with our expansion strategy which is focused on high quality, food-led, managed houses in the London area, a strategy that we will continue to pursue with both the Young’s and the Geronimo formats.”
Cleverly said Young’s was the perfect home for his company and he was delighted Geronimo’s DNA would be retained.
“The continued involvement of my trusted team will ensure that Geronimo’s unique spirit will be maintained and that the Geronimo footprint will develop alongside and as a complement to Young’s as the combined business looks to expand both formats," he said.
In the year to June 2010, Geronimo’s pre-overhead EBITDA was £6.1 million and it has around £30m of debt.
