Punch Pubs sold to US private equity investor Fortress | Mergers and acquisitions

Punch Pubs has been bought by private equity investor Fortress for nearly 1,300 UK pubs valued at up to £ 1 billion.

The company’s taverns employ around 20,000 people, while Punch only employs 280 people directly.

Punch owns more than 90% of the property in its real estate, making it an attractive destination for private equity owners. It also focuses on rural and suburban pubs, which are less affected by absent commuters than city-center chains.

Fortress is backed by Japan’s Softbank and also owns Majestic Wine, a UK chain of off-licenses, which it bought in 2019. The last purchase comes after it lost to a lengthy bidding war for the acquisition of Morrisons in the fall and was narrowly outbid in a year’s auction for the British supermarket chain by its US private equity rival Clayton, Dubilier & Rice.

Punch was first privatized in 2016 after accepting a £ 400 million takeover offer from beer conglomerate Heineken and private equity firms Patron Capital and May Capital. It owned 3,000 pubs when it was delisted in 2017, but as part of the 2016 deal, Heineken walked away with 1,900 of them, paying Patron and May £ 305million.

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A £ 1 billion sale would mean the owners have had substantial financial returns. Stephen Green, Senior Partner at Patron Capital, said Punch “has been an extremely successful investment for our investors,” without giving any details.

Punch felt confident enough to buy 56 pubs from Young’s in July, despite ongoing battles in the hotel industry, which is now facing a slump in trade over the Omicron coronavirus variant.

Private equity firms bought up a long line of British companies during the pandemic, particularly with the aim of bargaining undervalued publicly traded companies. However, these new owners are generally under pressure to provide their investors with returns in around five years, which means that more and more deals include private equity buyers and sellers.

Clive Chesser, who was appointed by Patron as CEO of Punch in 2018, said the deal was “very positive news for anyone involved with Punch”.

He said Fortress “is buying into our strategic positioning and business plan” and it would “work with the existing management team to invest in the business with innovation and capital”.

Cyril Courbage, a managing director at Fortress, said Punch did “an exceptional job addressing the challenges of the Covid crisis”. He added that the UK was “an extremely attractive place to invest”.

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