Tue, 13 Jul 2021 | BUSINESS SALE
Pub group Young’s has sold 56 of its 63 tenanted pubs, which trades as the Ram Pub Company, to Punch in a £53 million deal. The deal is around a 16x multiple of the division’s £3.3 million revenue for the year ending March 29 2021, on which it generated a £700,000 operating loss.
Following the sale of most of its tenanted division, Young’s said it would use the proceeds to strengthen its balance sheet, after a year in which it reported a pre-tax loss of £45.2 million. The sale of the Ram Pub Company will also help the company to cut its head office costs.
Moving forward, Young’s will look to focus more on its freehold pub and hotel operations, which generate a greater share of its turnover. The company also says the deal will provide it with “additional firepower” to both upgrade its existing pubs and to take advantage of future acquisition opportunities.
Young’s began exploring a sale of the division in May, when it engaged property agent Savills to start discussions regarding a possible disposal. The Ram Pub Company includes numerous prominent locations in London, as well as across Surrey, East and West Sussex, Kent and Middlesex.
Punch described the acquisition, which takes its total estate to more than 1,280 pubs, as a positive step for the business as it looks to emerge strongly from the COVID-19 pandemic, with the final lockdown restrictions set to lift on July 19.
Aside from the deal for Ram Pub Company, which is expected to close on August 9, Punch is also reported to be among the bidders for the Hawthorn pubs business. Hawthorn, which is owned by property investment firm NewRiver, comprises more than 670 pubs.
Young’s CEO Patrick Dardis said: “Our sole focus will now be on operating well-invested and premium managed pubs and hotels. We have a proven history of making attractive returns from investing in high-quality pubs and this disposal will provide us with additional firepower to upgrade our existing pubs and capitalise on attractive acquisition opportunities that may come to the market.”
“During lockdown, we invested a total of £17m in improving the pubs in our managed estate and the purchase of two new pubs: Enderby House in Greenwich and Alban’s Well in St Albans. We are delighted to be welcoming back our customers and are already seeing encouraging trading, despite some restrictions remaining. The board is confident Young’s will emerge from the pandemic in a stronger position and is excited about the future of the business."
Punch CEO Clive Chesser said that the Ram Pub Company locations “will be a great addition to the Punch estate" and added that "this acquisition represents an extremely positive step for our business as we emerge from the crisis of the pandemic and head towards the long-awaited lifting of trading restrictions next week.”
Read more about how pub companies are preparing for the end of lockdown with M&A activity.
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