- City Pub Group shares rose more than 30% after deal revelations
Young’s is acquiring City Pub Group, the upscale pub chain behind popular Chelsea haunt The Phene, in a £162m deal.
The offer of 108.75 pa shares in cash, plus Young’s shares, represents a 46 percent premium to City Pub Group’s closing price on Wednesday.
City Pub Group shares rose 33.79 percent or 33.45p to 132.45p on Thursday, after rising more than 74 percent in the past year.
Deal: Young’s acquires City Pub Group in a £162 million deal
Young’s shares fell 0.45 percent or 5.00p to 1,105.00p in early trading, after falling around 5 percent in the past 12 months.
Young’s claims the deal will ‘substantially’ increase the number of premium bedrooms within its portfolio by more than 25 percent to 1,065.
The company will also expand its 50-pub estate to 279 pubs, an increase of more than 20 percent.
Young’s said the businesses can be combined with “very limited additional overhead costs”, while the deal will deliver margin benefits and “operational synergies at the pub level”.
Young’s CEO, Simon Dodd, said: ‘City Pubs is an excellent business that we have been following for some time, and which is closely aligned with Young’s in terms of both strategy and culture.
‘Like us, City Pubs operates premium, individual and well-invested pubs and rooms, with an emphasis on the highest standards of customer service.
‘Both companies have performed well recently in a difficult trading environment, which is testament to the strength of our business models, people and customer approach.’
Plush: City Pub Group is the luxury pub chain behind popular Chelsea venue The Phene
Clive Watson, executive chairman of City Pubs, said: ‘Like all hospitality businesses, the pandemic derailed City Pubs’ progress, but it has since been able to deliver a strong performance with a more focused, transformed business with the lowest debt in its history and a solid strategy has been implemented.
‘The City Pubs board has therefore been able to assess today’s advice from a strong position.’
He added: ‘Given the uncertain economic environment, high interest rates and inflation in particular, and our plans for long-term growth as an independent company, the initial approaches were rejected.’
City Pubs Group directors plan to unanimously recommend that its shareholders vote in favor of the proposed deal.
In the 26 weeks to October 2, Young’s total revenue rose 5.4 percent to £196.5 million, and adjusted EBITDA rose 6.4 percent to £47.9 million, while Managed House’s EBITDA for the period increased by 6.3 percent to £59.0 million.
Adjusted operating profit grew by 6.9 percent to £31 million, ‘driven by a sector-leading’ margin of 15.8 percent, up from 15.5 percent.
Young shareholders will receive an interim dividend of 10.88p per share, an increase of 6 percent.
Dodd said: “While cost pressures in our supply chain remain, we have successfully mitigated headwinds and maintained our industry-leading margins. There are positive signs on the horizon, with cost pressures continuing to ease and stabilize in some areas.
“Our strategy underpins our consistent delivery of industry-leading results, and we remain confident in continuing to deliver superior returns for all our shareholders.”
On Wednesday, Fuller, Smith & Turner said it was gearing up for a bumper festive trade as bookings for the Christmas period soar.
The pub and hotel group’s Christmas bookings are already 11 percent higher than last year, Fuller’s told investors, as London employees return to the office less often and work from home.
Turnover rose 12 per cent year-on-year to £188.8m in the 26 weeks to September 30, amid ‘strong performance across the estate’, while profits rose 48 per cent to £14.5m.