The acquisition, which is believed to be valued at £15m-18m, forms a combined group of 94 pubs, bars and eateries, two breweries brewing over 30,000 barrels, as well as retail and wholesale operations employing more than 750 staff.
The LGV Capital-backed Liberation Group intends to invest in Butcombe’s existing 19-strong managed pub estate. It said it was “seeking brand consistency across the group and planning to refresh the food offering with further local produce and recipes”.
The company, which operates 75 predominantly freehold pubs across the Channel Islands, said it planned further expansion on the mainland through the acquisition.
It is planning to build a portfolio of food-led managed and high quality tenanted pubs, whilst continuing the growth and development of the Butcombe beer and cider range.
Liberation Group was formed in 2008 following a management buyout backed by LGV Capital supporting a management team led by Mark Crowther, who will become group chief executive of the extended business.
Guy Newell will remain as managing director of Butcombe, which was founded in 1978 and operates sites across Bristol, Bath, the Mendips and the Cotswolds.
The combined business will benefit from stronger buying power and supply opportunities, enabling Liberation Group to sell Butcombe beers in the Channel Islands, while exporting Liberation ales on draught and in bottles into UK pub chains and supermarkets with whom Butcombe already has relationships.
Crowther said: “We have been looking for some time for the right UK business to acquire as part of our longer term growth strategy. This marks the start of the exciting next chapter for Liberation and Butcombe both of whom share the same passion for quality beers and great pubs. The enlarged group provides the perfect bridge head platform for further future growth in the UK market. We are really looking forward to welcoming the Butcombe team into the Liberation Group.”
Newell said: “We have had significant interest from several UK pub and drinks businesses, but for us Liberation Group was by far the best fit with our business. They share our ethos for high quality products and service and have proved, as we have, that being independent does not necessarily prevent you from being recognised for excellence alongside some of the biggest global names in the industry. This is a new chapter for both businesses and all of the team here is looking forward to being a part of that.”
Steven Phillips, director at LGV Capital, said: “This is an exciting development for Liberation and Butcombe and we are delighted to support a first class management team to continue the development and growth of the group.”
Butcombe reported that sales rose £300k to £8.7m in the year to 28 February 2014. EBITDA fell 6% to £2.1m and pre-tax profit was £1.02m, up from £561k the year before.
The deal between Liberation and Butcombe mirrors in many respects the acquisition of Market Town Taverns by the Isle of Man-based Heron & Brearley in 2011.