No Pain, No Gain: Sadly, I have to end this love affair with a brewery

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The Independent Online

I've faced an uncomfortable problem in the past few weeks. It is one no veteran investor should have to contemplate. After all, we are all in this business to try to make money, so a generous takeover bid should, without question, be accepted with glee.

I've faced an uncomfortable problem in the past few weeks. It is one no veteran investor should have to contemplate. After all, we are all in this business to try to make money, so a generous takeover bid should, without question, be accepted with glee.

Yet I found myself reluctant to call time on my oldest shareholding. I realise that I will, with some justification, be accused of falling in love with the share. Yet it seemed to me that little Jennings Brothers, a Lakeland brewer, had been part of my investment life for such a long time that it represented an act of betrayal to part company.

But that is what is going to happen. Jennings, which dates back to 1828, received a £46m cash bid from Wolverhampton & Dudley Breweries, which seems intent on swallowing as many pubs as it can. The Jennings board said yes, and last week Wolves declared it had more than 82.5 per cent of the capital.

I am one of the shareholders who did not accept. Another was the Campaign for Real Ale (Camra), the redoubtable beer pressure group. I have since done so. I do not know whether Camra has caved in as well. There is now little point in hanging on.

I had hoped that the takeover would not go through. I am a lover of traditional bitter and have grown increasingly frustrated as brewery after brewery has fallen victim to takeover bids and their brands have been destroyed. During my lifetime, real ale has almost been swamped by a seemingly endless tide of bland, overpriced and over-rated lager. In some outlets it is now impossible to get a pint of hand-pumped bitter.

Jennings rolls out a fine range of bitters which it sells through its 128 pubs and other outlets. Wolves says it will keep the brewery in production. But that is not the same as the company remaining independent.

I believe that the present Wolves management will honour its word. But people get replaced. In a few years' time, new managers could well take their accountants' advice and decide that the Cockermouth plant is too costly to run and should be closed.

We have seen it happen. Breweries and brands will be preserved, come what may, has been the promise made during many a bid. Nevertheless, many have since disappeared.

I realise that Wolves is a dedicated producer of traditional beer. Indeed, it brews more of the stuff than any other brewer. So it could be argued that Jennings could not have found a better home. But the point is that Jennings is comfortably profitable and well regarded, and has encouraging prospects. It did not need a new home.

It was in the 1970s that I alighted on Jennings, which had already survived many calamities and unwanted assaults. Then it was not quoted, although a fully fledged public company. It had, thanks to its loyal band of Cumbria shareholders, defeated one of the takeover masters of the day - the late Sir Maxwell Joseph, whose beer victims included Watney Mann and Truman. Both were substantial brewers and featured in epic takeover encounters.

Joseph received a shock when most of Jennings' 400 shareholders rejected him. He had the consolation of capturing another Cumbria brewer, Workington, but the Cockermouth rebuff destroyed his plan for a new brewing power, and Workington was eventually sold to, I think, Scottish & Newcastle.

As far as investments go, my modest Jennings involvement has not been outstandingly lucrative. Still, I am not complaining. I paid the equivalent of 49p (later I picked up a few more shares at 130p), which compares with Wolves 430p offer. It is also worth noting that I received dividends totalling nearly 140p on each of my original shares. Not up to the Tesco standard, where since 1980 the share price alone has turned £1,000 into about £115,000, but still a satisfying return.

I was hoping that Wolves would suffer a "Maxwell Joseph" defeat. Or, if it won control, that it would be prepared to tolerate a significant minority shareholding which could have exerted some token influence. It has made it clear it has no such intention.

So it is, in effect, all over. My resistance has been in vain. Perhaps I am too starry-eyed. When a company without a dominant shareholder becomes a plc, then cash is always king - as Manchester United supporters have discovered.

Still, it is sad when what comes to be regarded as an institution has little chance of surviving as an independent entity once Big Brother decrees other wise.

I, like Manchester United shareholders, have the consolation of a tidy profit. I will spend some of mine on a few pints of bitter - but perhaps avoid any of the Wolves brands.

cash@independent.co.uk

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