M&B to sell off franchised pubs

Mitchells & Butlers (M&B) is to sell-off the remaining 53 franchised pubs it owns.

The news comes as it completed the sale of 333 wet-led pubs to Stonegate Pub Company, backed by TDR Capital.

The managed operator has already accepted individual offers for 15 pubs from 13 franchisees but now is set to sell off its remaining franchised pubs — potentially as one portfolio.

M&B decided that its franchise division was non-core earlier this year. It is looking to sell non-core assets to raise money to expand six food-led brands.

The franchise division is very high quality with average weekly sales per pub per week of around £13,500.

Award-winning M&B franchisees Jon and Paula Briscoe recently acquired their two franchised pubs — the Fox Revived in Norwood Hill, just a few miles from Gatwick Airport and the Jolly Farmers, near Reigate.

Ex-M&B executive Chris Gerard, also had offers accepted for both his pubs — the Rusty Gun, St Ippolyts, Herts, and the Foresters, Church Crookham, Hampshire.

The completion of the Stonegate deal means that £500m has been realised from recent non-core disposals. The pubs had EBITDA and operating profit in the 52 weeks ended 10 April 2010 of £52m and £35m respectively. This represents an EBITDA multiple of 7.2x on the gross proceeds.

Around 20% of the pubs are short leasehold generating £8m of EBITDA and £2m of operating profit in the 52 weeks ended 10 April 2010.

The company intends to reinvest the proceeds into growth opportunities offered in the informal eating out market.

Stonegate is chaired by Town & City chairman Ian Payne, sparking rumours that industry consolidation is on the cards.