Derek Pain: 'Essenden ready to bow out as Greene King swallows Spirit'

The proposed deal will be through a scheme of arrangement

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The Independent Online

The projected Essenden takeover is at last under way. Talks, first revealed in March, went to the wire before this year's second constituent of the No Pain, No Gain portfolio fell victim to bid action.

A disappointment is the price – 80p cash a share; I had expected a figure nearer the 100p mark. But, perhaps significantly, the shares have hovered around the final bid price since negotiations were first instituted. The proposed deal, like so many others these days, will be through a scheme of arrangement.

The portfolio intends to await the 80p distribution rather than sneak a quick profit by selling through the stock market, which reacted to the offer by clipping a few fractions from the shares.

Although I thought the bid for the tenpin-bowling chain would be higher, I am not grumbling. I am satisfied with the profits achieved, as the portfolio invested at 24p. And it reaped a nice reward on a previous Essenden incarnation, then a leisure group called Georgica.

It seems a done deal. A non-trading subsidiary, the investment group Harwood Capital, which has funds under management of around £1.3bn, is behind the offer. It already has a 34.1 per cent stake, and with other shares already in the bag, a majority of votes backs the bid. So there is little room for a counter offer.

I am surprised it took so long; perhaps there was interest from other quarters. Essenden, under the chief executive Nick Basing, has made a remarkable recovery and is still trading well. Harwood maintains that its prospects will be enhanced in a "private company environment" and intends to continue the chain's development, possibly through acquisitions.

Essenden did at one time nurse dreams of putting through a big takeover of its own, but in the end any acquisition plans were abandoned.

There are already boardroom links between Harwood and the tenpin group through Christopher Mills, the investment guru, and there are nearly 1,000 Essenden shareholders, some dating back to the days of a now-distant forerunner, Allied Leisure. For any shareholder from the Allied days of the 1990s, the bid represents a substantial loss.

The terms appeared in the same week as the portfolio's other 2015 deal reached its completion – the swallowing of Spirit Pub Co. Brewer Greene King's interest first emerged in September. The portfolio was not prepared to await such a long-winded process and sold its stake early this year.

The Influential Motley Fool investment website has acquired a taste for one of my disappointing investments, Stock Spirits. It reckons the depressed price (as I write, around 192p) offers a buying opportunity, with expected growth this year and next. The portfolio acquired the shares last year at 278.75p. The price did top 310p afterwards, but with disappointing results it has been downhill ever since.

There is an old saying that we should expects events to occur in threes. Perhaps there is a chance the portfolio could enjoy a lucky bid threesome with an out-of-the-blue takeover strike at the Polish vodka producer?

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