Spirit wins £2.5bn S&N pub auction

Related tags S&n retail Private equity

Spirit Group has won the auction for the Scottish & Newcastle (S&N) managed pub business.S&N has confirmed the £2.51bn sale, which will...

Spirit Group has won the auction for the Scottish & Newcastle (S&N) managed pub business.

S&N has confirmed the £2.51bn sale, which will see the 1,400-plus S&N Retail pubs combined with Spirit's 1,000 strong estate to create the UK's biggest managed pub business.

The consortium of private equity firms backing Spirit's bid, including Texas Pacific, Blackstone, CVC Capital Partners and Merrill Lynch Global Private Equity, have formed a new company, Spirit Amber Bidco, to complete the deal. The existing business, Spirit Group Holdings, will move into Spirit Amber Holdings.

The cash deal is expected to be completed during November, subject to approval by S&N shareholders.

Spirit became the clear favourite after the two other shortlisted groups saw their respective partnerships collapse last week. The offer mounted by Laurel Pub Company and Nomura fell apart as did the consortium of CVC and Cinven.

Laurel quickly regrouped and teamed up with Cinven, while CVC jumped aboard the Spirit bid. It owns 15 per cent of the Burton-based business.

S&N, Britain's biggest brewer, is selling the managed estate to focus on developing its global beer business. The deal includes a seven year agreement for the supply of S&N beer and cider brands at market prices, guaranteeing current volumes.

S&N chief executive Tony Froggatt said: "The successful sale of S&N Retail is a key step in the Group's strategy of focusing on its brewing business. The proceeds from the sale will be used to reduce debt, strengthening the financial position of Scottish & Newcastle."

Mr Froggatt added that he was confident that the S&N Retail team, led by executive chairman Bob Ivell, "will continue to deliver value for the new business."

Tony Campbell, Chairman of Spirit Amber said: "We are delighted to acquire such a high quality business with great pubs and great people. I am confident that the business will continue to prosper as part of the new group, which will be the leading managed pub business in the UK."

Along with S&N's pubs and restaurants, the deal also includes the Premier Lodge budget hotel business. While Whitbread is understood to be keen to combine Premier Lodge with its own Travel Inns brand, Mr Campbell said he was not in talks with anyone to sell Premier Lodge, and would be reviewing the business before any decision is made.

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