MGPE wins battle for Whitbread pubs

Nomura's bid to acquire 3,000 more pubs comes up short

Mar 20, 2001 - Whitbread has signed a deal for the sale of its 3,000-strong U.K. pub estate with Morgan Grenfell Private Equity valuing its pubs and bars division at 1.63 billion (about $2.3 billion).


The deal follows a hotly contested final round of bidding in which MGPE narrowly beat Japanese investment bank Nomura, already Britain's biggest pub landlord, Punch Group and a joint bid from Candover and Pubmaster.

Whitebread, which owns U.K. family restaurant chains such as Pizza Hut, TGI Friday's and Bella Pasta, said the demerger would enable it to focus on the high-growth brand-led lodging, eating out and active leisure markets in the U.K. The group also owns the Travel Inn hotel chain.

Whitbread's sale follows a trend among U.K. operators to sell off their pub chains as a result of declining margins in the industry. Hotels group Bass sold 988 pubs to Principal Finance, funded by Japanese investment bank Nomura. Nomura has been steadily buying pub chains over the past few years and now owns more than 5,000 outlets in the U.K.

The Whitbread board said it expected the deal to be "substantially" complete by early June, but others note the pub sale could be held up because several bidders are understood to be concerned about the details of the contract.

Sir John Banham, chairman of Whitbread, said: "This represents a very favorable outcome for Whitbread holdings shareholders. The board has fulfilled its objectives of realising full value for the pubs and bars division and creating a focused company with leading positions in growth segments of the UK leisure market."

Whitbread put its pub estate up for sale last October to focus on hotels, restaurants and leisure. The estate consists of 1,710 leased pubs and 1,288 managed pubs, including the Hogshead and Casa bar chains.

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