How the UK's biggest pub company was formed

By Nikkie Thatcher contact

- Last updated on GMT

Company history: Stonegate started some 11 years ago
Company history: Stonegate started some 11 years ago

Related tags: Stonegate, Tenanted + leased, Pubco + head office

With Stonegate now being the largest pub company in the UK, The Morning Advertiser has taken a deep dive in the company’s history of mergers and acquisitions in its 11-year history.

Stonegate was originally formed more than a decade ago in 2010 and started with 333 pubs, which were acquired from Mitchells & Butlers​ (M&B).

M&B disposed of the 333 sites for £373m to private equity firm TDR Capital, which at the time, was the backer of Stonegate.

The pubs sold comprised of 52 Scream bars, 71 music and late-night venues, 75 unbranded town centre pubs, 67 community pubs, and 68 other, smaller pubs.

About a third of the total sites were located in the south of England with 38% in the Midlands and the rest spread across the UK.

In March 2011, Stonegate revealed it was set to complete a £2m refurbishment programme in the first quarter of the year. It meant the 20 of the 333 acquired sites were converted or rebranded​.

Less than a year later in June 2011, the group bought the Town & City Pub Company​ including the Yates and Slug & Lettuce brands.

The deal was under discussion for eight months and meant Stonegate became a 550-strong managed company. At the time, this made the business the UK’s fifth largest managed pub company and employing more than 10,000 people.

In June 2013, the firm hired Colliers and Davis Coffer Lyons to acquire freehold and leasehold units​ of 4,000 to 5,000sq ft in a variety of areas in what was believed to be an instruction to expand its Slug & Lettuce estate.

Later that summer (August), it completed the acquisition of 13 Living Room sites​ from Premium Bars & Restaurants in a deal estimated to be about £10m.

The expansion continued into the winter of 2013 as in November, the acquisition of 78 sites from the administrators of Bramwell Pub Company​ was announced, in a deal rumoured to be worth about £35m, meaning Stonegate’s estate rose to 623.

Portfolio growth

Moving forward to 2014, Stonegate hit the acquisition trail again with a further 15 sites purchased from Scottish operator Maclay Inns​.

At the time, the company said the deal its first major purchase following the disposal of a number of sites in the previous two years.

It added the new sites, which included 13 freeholds and two leaseholds, were in locations across Scotland such as St Andrews, Glasgow’s West End and the Edinburgh University district.

This was followed by a 53-site package from the Tattershall Castle Group for a deal believed to be valued at about £100m in October.

In the same month, the firm confirmed it placed a package of four central London freehold pubs​ from the Tattershall Castle Group estate on the market as part of a sale and leaseback process.

This followed OLIM Property’s purchase of 15 Stonegate pubs for £28.27m in June 2014.

A year later, 10 JD Wetherspoon pubs were added to the portfolio​ as well as the acquisition of Intertain – meaning a further 30 sites were added to Stonegate’s estate.

The deal for Intertain, which was for an undisclosed sum, were primarily under the Walkabout brand and took Stonegate’s total number of sites to more than 690.

Three more pubs were added to Stonegate’s estate in February 2017 after exchanging contracts to take on the trio of London venues from Faucet Inn​ alongside two pubs from JD Wetherspoon​.

Later in the same year, 13 pubs operated by Stonegate on a leasehold basis, were sold for £23m by Coffer Corporate Leisure to BlackRock​.

In September 2017, the group strengthened its property estate in the capital through the acquisition of the Sports Bar & Grill concept​, which brought its portfolio to 703.

Expansion history

Then in the summer of 2018, the company acquired 15 venues from Novus Leisure​ before purchasing Be At One in the same month (July), both for undisclosed sums.

The next 12 months saw the business take on Bar Fever Ltd, growing the portfolio by 32 venues as well as an additional six from Novus Leisure​.

The six Novus sites were central London locations such as the West End, the City and Canary Wharf. Acquiring the Fever Bars meant Stonegate grew into eight towns it was previously unrepresented including Taunton, Tunbridge Wells, Basingstoke and Macclesfield.

Just as the coronavirus pandemic hit, Stonegate became the largest pub operator thanks to its purchase of Ei Group for £1.27bn.

The deal was first announced in July 2019​ where Ei Group’s entire business was valued at almost £3bn including its debt and adjusted for the disposal of its 370 commercial properties.

In September, Ei shareholders gave the acquisition near unanimous approval​ with 96.57% voting in favour.

A month later, the Competition and Markets Authority (CMA) started investigating​ the deal before it passed the acquisition​ after the pubcos satisfied the watchdog that a set number of pubs would be sold to avoid potential monopolies.

During this time, in January 2020, Stonegate also acquired LGBTQ+ venue on Manchester’s iconic Canal Street​ – the venue was renamed as The Brewers.

Most recently, investment vehicle RedCat acquired 42 pubs from Stonegate​ for an undisclosed sum. The sites were mainly in the south east (25), 11 in the north of England, two in the Midlands and four in Wales.

The package was a combination of 14 managed pubs and 28 tenanted with half of the managed venues in London.

Stonegate now has 4,573 venues in total – 1,289 in its managed arm and 3,284 in the leased and tenanted division – making it the largest pub company in the UK.

Related topics: Other operators

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