Heineken is set to become the owner of Punch Taverns, after today (15 December) agreeing to acquire the Burton-on-Trent pub group for more than £400m.
The Dutch brewing giant has made a cash offer of 180p a share, a day after Punch announced it was considering two bids for its business.
With a value of £402.7m, the deal will see Patron Capital Advisers buy Punch through Vine Aquisitions, a newco, and then immediately sell the newly secured pubs estate to Heineken.
The Foster’s owner was one of two parties vying for ownership, having made an indicative offer of 174p a share to secure Punch, which owns almost 3,300 leased or tenanted pubs across the UK. The Dutch beer-maker faced competition from Emerald, the investment vehicle of Punch co-founder Alan McIntosh, which said it would pay 185p per share.
Heineken already runs an estate of 1,100 British pubs through its Stars & Bars arm, acquired in 2009 via the Royal Bank of Scotland’s acquisition of Scottish & Newcastle.
Heineken’s move appeared strange for a marketing-led international brewer but reflected the realities of the unique UK beer market, according to Andrew Holland, analyst at Societe Generale Corporate & Investment Banking.
“By buying pubs, Heineken is seeking to capture more of the value chain,” he said, adding a note of warning about Punch’s troubled history that saw the business nearly go bust as a result of the 2008 financial crisis.
However, the Burton-based business made a pre-tax profit of £53m in the year to August 2016, and owning pubs made sense for Heineken, said Holland. “It gives a guarantee of sale of beer – the pub owner decides what beers are stocked – and gives leverage when negotiating contracts with other brewer/pub owners. Reciprocal supply agreements become possible.”
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