14th Dec 2016 17:32
LONDON (Alliance News) - Shares in pub operator Punch Taverns PLC surged by a third on Wednesday after revealing it has received two takeover offers, just over a month after the company returned to annual profit following a tortuous restructuring completed in 2014.
Shares in Punch closed up 36% to 175.35 pence on Wednesday, one of the best performer on the London Main Market.
Punch is the second-largest pub chain in the UK by number of sites, with around 3,300 drinking houses, compared to about 4,600 for fellow London listing Enterprise Inns PLC.
Punch said it has received a proposal from Patron Capital Advisers LLP, a London-based private equity house, for a possible cash offer at 174.00 pence a share. That would value Punch at GBP386.2 million and represents a 34% premium to its closing price of 130.00p on Tuesday.
As part of the deal, Dutch brewer Heineken NV would acquire Punch A, one of the securitisation structures within Punch, immediately following the offer. Advanced discussions with Patron and Heineken are ongoing, said Punch Taverns. The Patron offers values Punch at GBP386.2 million.
The Punch A securitisation is one of the two tranches the company's debt was split into in 2014 when it completed a significant restructuring of its financial obligations.
The company had expanded rapidly in the 2000s but then took a hit from the introduction of the smoking ban in the UK, higher beer duties, and a general downturn in the British pub industry during the financial crisis of 2008.
The company frequently warned in the lead up to restructuring that it could default on its debt pile and eventually agreed a debt-for-equity swap deal in October 2014 with its lenders which gave its bondholders 85% of its equity.
Separate to the Patron proposal, Punch also said it has received an approach from Emerald Investment Partners Ltd, regarding a possible cash offer at 185.00p a share. The proposal is conditional on Emerald arranging committed financing and the recommendation of Punch's board, among other things. Emerald's offer values Punch at GBP410.6 million.
Late Wednesday, Emerald confirmed it has made the offer at that price, and said it has the right to lower its bid to take into account any dividend payments made in the near future. Emerald said there is no guarantee that a formal offer will be made and confirmed it already holds 4.8 million shares in Punch, equal to a 2.2% stake.
"Emerald also reserves the right to offer a lower price if it were to be recommended by the Punch board or if a third party announces a firm intention to make an offer for Punch which is valued at a lower price than the proposed offer price," said Emerald.
Punch Taverns noted that both Patron and Emerald are required to either announce a firm intention to make an offer, or that they do not intend to make an offer, by January 11, 2017, under UK takeover rules.
The offers emerged after Punch had said in August it returned to profit in the financial year to August 20. The company reported a pretax profit of GBP60.1 million for the period, swung from a GBP105.2 million loss a year before.
Punch had attributed its return to the black to its restructuring programme, which involved selling off underperforming pubs and streamlining the wider business.
By Adam Clark; [email protected] and Sam Unsted; [email protected]; @SamUAtAlliance. Updated by Joshua Warner; [email protected]; @JoshAlliance
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