George Gale falls to Fuller's for £91.8m

Observers left speculating about which regional brewer will sell up next

by The PMA Team

Industry watchers are wondering which regional brewer will be the next to sell up after Fuller's snapped up Hampshire brewer George Gale this week for £91.8m.

The surrender of Gale's independence follows the sale of Belhaven, Ridley's and Jennings this year. A brewing expert said: 'Things are getting tougher and tougher in trading terms. The forthcoming smoking ban will leave many smaller firms wondering whether now is the right time to sell the business.'

Gale's managing director Nigel Atkinson said the competition to buy pubs and the uncertainty on smoking issues were among the reasons that shareholders decided to sell. 'The Fuller's offer, which was unsolicited, is an exceptionally good one,' added Atkinson, who has been asked to stay on to integrate the two businesses.

Fuller's chief executive Michael Turner said Gale's had been top of its acquisitions list for a decade. The chance of a sale at last was raised at a meeting between Turner and Gale's chairman Charles Brims three months ago.

'I found an excuse to go and speak to Charles and broached the subject. Gale's had been adamant in the past about going into an auction process if it was to sell. Ultimately, Gale's decided we were the best suitor. They wanted to sell the business to somebody with the right ethos.'

The Fuller's offer means that it is paying around £827,000 per pub for Gale's 111-strong estate and will take the Fuller's estate to 361 pubs.

A huge question mark hangs over the future of Gale's historic 23,000 barrels-a-year brewery in Horndean, with Fuller's declining to guarantee its future.

'We are very open-minded at this stage as we get to grips with the detail of the Gale's business, but there's no absolute assurance (about the Gale's brewery),' said Turner. Fuller's has already received irrevocable backing for its offer from 80.6% of Gales shareholders.

Brims said: 'Although it is always sad when a long-established family business decides to sell, I am confident that the decision is right for Gale's shareholders and right for the business.'

Gales, founded in 1847, runs 69 tenanted pubs and 42 managed sites. In the year to 29 January 2005, the company made profit before tax of £4.3m on turnover of £39.4m.

Wolverhampton & Dudley chief executive Ralph Findlay, said: 'I think the forces behind consolidation are well established and quite clear. In a mature market, achieving top-line growth can be challenging.

'Costs have been steadily rising for some time and legislation is becoming ever-more-challenging for smaller businesses to manage. And for buyers, it is a fact that they are operating in a low-cost environment.'

Camra (Campaign for Real Ale) spokesman Iain Loe, said: 'This is opportunism at its very worst. The people of Horndean will lose some excellent beers.

'It is not a good day for lovers of beer. It is sad Gale's doesn't have the conviction to carry on. It is very unfortunate as it is a profitable company.'

Cask ale expert Roger Protz said: 'I think Fuller's must have felt the need to grow or risk having their own business become vulnerable.'