The transaction, which is still to be confirmed, will add approximately 1,900 pubs across the UK to Heineken’s existing portfolio of 1,049 leased and tenanted pubs operated under the company’s Star Bars and Pubs business arm.
If the deal goes ahead, Heineken will become the third-largest pub business in the UK with approximately 2,950 leased and tenanted pubs.
Punch shareholders and regulatory authorities are still to give approval but Punch’s top three shareholders – Glenview Funds, Avenue Funds and Warwick Funds – have already voiced their support.
The Punch directors intend to unanimously recommend Punch shareholders vote in favour of the transaction.
“A huge vote of confidence in the Great British Pub”
David Forde, Managing Director of Heineken UK, said, “Today’s announcement is a huge vote of confidence in the Great British Pub. Our proven track record of success demonstrates that well invested and well run pubs in the leased and tenanted sector can thrive.
“Today’s development is good news for pub-goers across the UK who will see the benefit of better pubs in their communities. We look forward to welcoming new licensees into Star Pubs & Bars, and to working with them to grow their businesses.”
Stephen Billingham, Chairman of Punch, added, “The Punch Board and management team have positioned Punch to drive long-term value for shareholders and our recent performance has demonstrated the successful execution of this strategy reflecting the hard work and quality of the whole Punch team.
“While the Board did not solicit this offer for the company, we believe this is a good outcome for shareholders as the offer provides cash certainty at a significant premium.”
In 2012, Heineken rebranded its pub estate as Star Pubs & Bars and has invested over £20m a year to develop its pub estate since 2014.
Heineken intends to integrate all former Punch pubs into Star Pubs & Bars where possible and has pledged to work closely with incoming licensees to help them “realise increased potential from the pubs that they operate.”
Patron Captial, which owns Vine Acquisitions Limited, will acquire the remaining pubs in Punch Tavern’s 4400-wide portfolio.
Stephen Green, Senior Partner of Patron Capital, said, “Our offer creates an exciting opportunity for Punch as a more focused business. Under private ownership, with strong financial backing, and a commitment to continued investment, pubs and publicans will have our full support to deal with changing market dynamics and provide their customers with the best possible offer. These are high quality pubs with excellent future potential.”
Punch announced an annual profit of £60m in November after losing money for the previous two years.
The Scottish Licensed Trade Association (SLTA) expressed “grave concerns” over the proposed takeover.
Paul Waterson, SLTA Chief Executive, said, “It would create a ‘monster-tie’; a chain of over 4,400 pubs that would destabilise an already fragile industry.”
He added, “It represents bad news for brewers, whose route to market will almost certainly be controlled by Heineken. It also signals bad news for drinkers who will be offered far less choice at the bar.”