The acquisition consists of 53 pubs out of the 62 operated by TCG including the famous Tattershall Castle flagship floating bar which is moored on the River Thames on London’s Victoria Embankment.
The deal will take Stonegate’s estate to 665 sites.
TCG has a diversified drink-led pub business, the majority of which are freehold, located across the UK. Over half of the pubs being acquired are in London and the South East.
Stonegate said the acquisition is highly complementary with the group’s existing estate. It said th acquisition was an “excellent strategic fit” with the group’s seven formats, including Slug & Lettuce, and all 53 pubs will migrate into one of these.
Stonegate’s management led by Simon Longbottom said it had recognised the strong market position of the TCG estate and is confident that this can be enhanced through “further capital investment to deliver substantial returns”.
It said that the TCG portfolio will further consolidate the group’s position as a leading high street, managed pub operator in the UK. The company plans to invest in the majority of the 53 TCG pubs being acquired over the next three years. Stonegate has a track record of consistently achieving ROI in excess of 40% on its investments.
Stonegate said that the Bramwell and Maclay’s estate, acquired in 2013 and 2015 respectively, are recent examples of the group’s ability in “identifying, unlocking value and ultimately delivering higher returns from the pub assets which it has acquired”. It said both the acquired Bramwell and Maclay’s estates are performing well.
The c620-strong Stonegate, which earlier this year acquired 15 sites in Scotland formerly operated by the Maclay Group, had previously run the rule over the then 96-strong TCG when it was placed on the market by former owner Alchemy Partners at the beginning of 2012.
TCG operates the Henry’s brand, was formed in 2005 with the acquisition of 178 Spirit pubs for £177m.The company’s estate includes the St James Tavern in Piccadilly and Henry’s in Covent Garden. It has continually trimmed its estate over the last few years. It was acquired by Lone Star, the global private equity firm, last year.
Valued at £1bn
Stonegate has been tipped as an IPO candidate and is believed to be close to appointing banks to oversee the process. It is thought it will be valued at just under £1bn, including approximately £300m of debt.
Longbottom said: “I am delighted to welcome our new colleagues from TCG into the wider Stonegate family. TCG is a high quality business which we have coveted for some time, with good people, attractive assets and considerable growth potential. Our strong reputation and position in the market firmly establishes Stonegate as the natural home for a leading pub portfolio of this kind. The acquisition is a perfect fit with our existing estate – both geographically and operationally - and is entirely consistent with our stated strategy to capitalise on the drink-led opportunity. We will continue to implement our ambitious expansion plans to build one of the leading managed pub businesses in the UK.”
Nigel Wright, chief operating officer of TCG, said: “This is an excellent outcome for the dedicated and very talented people of TCG who have consistently delivered a performance ahead of industry benchmarks, for the most part without the capital investment that would allow their venues to realise their full potential. It is a great fit both culturally and locationally. I am personally looking forward to see what TCG’s pubs and people will go on to achieve with the increased levels of personnel development and investment that Stonegate will be able to provide.”
Stonegate was formed in 2010 from the acquisition by TDR Capital, a private equity firm, of 333 pubs from Mitchells & Butlers.
Sapient Corporate Finance and Christie + Co are understood to have advised on the deal.