Mitchells & Butlers announces the proposed disposal of 333 Non-Core Pubs for a cash consideration of £373m to Stonegate Pub Company Limited
Mitchells & Butlers announces the proposed disposal of 333 Non-Core Pubs for a cash consideration of £373m to Stonegate Pub Company Limited, a company controlled by TDR Capital LLP.
The disposal is in line with Mitchells & Butlers’ strategy to withdraw from the lower price, drinks-led market and the late night high street bars and venues as announced in March 2010. On completion, £500m will have been realised from recent non-core disposals. The pubs had attributable 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. 20% of the pubs are short leasehold generating £8m of EBITDA and £2m of operating profit in the 52 weeks ended 10 April 2010. In the next phase of the Company’s stated strategy, the Board intends to reinvest the proceeds into growth opportunities offered in the informal eating out market where the Company’s market leading brands deliver attractive growth prospects.
Following the disposal, Mitchells & Butlers will have 1,580 restaurants and food-led pubs with higher growth potential. Each year since 2007 this core business has grown like-for-like sales by around 1 percentage point more than the historically reported Mitchells & Butlers’ results whilst operating profit per pub has increased by 3% per annum. Including the gross proceeds from all the non-core disposals, net debt at 10 April 2010 would have been £2,013m, comprising £2,303m of securitised long term debt and £290m of cash. Completion of the disposal of 333 Non-Core Pubs is scheduled to occur by mid November 2010 and is conditional on the approval of the Company’s shareholders. A circular providing further detail of the disposal will be posted to shareholders in due course.
Commenting on the transaction, John Lovering, Chairman, commented: “I am delighted with the progress being made on reshaping Mitchells & Butlers’ portfolio in line with the strategy we announced in March. Adam Fowle and the new management team are making excellent progress in accelerating the pace of change throughout the organisation. The cash resources released by the sale programme will allow the Company to accelerate its growth into the informal eating out market.”
Adam Fowle, Chief Executive, said: “We are pleased that we have been able to announce the exit from our price sensitive drinks-led pubs and our late night venues in a single transaction. This disposal, when combined with the sale of our lodge and bowling businesses, completes the first stage of our strategy. This will now enable us to reinvest in the informal eating out market where our market leading brands, corporate scale and operational capability will deliver attractive growth and investment returns for our shareholders.”
