Bass backs Punch in pubs battle

PUNCH TAVERNS, the pub company led by Hugh Osmond, will today announce it has secured the backing of the leisure giant Bass in its battle to beat Whitbread's pounds 2.45bn offer for 3,500 Allied Domecq pubs.

The pub company will confirm that Bass has agreed to spend pounds 1bn buying at least 700 pubs from Punch if it succeeds with a cash offer to trump the paper bid from Whitbread.

Punch will issue a statement to the Stock Exchange saying it is preparing an offer for the pubs, to be financed by a mixture of debt and equity. A formal offer, expected to be in the range of pounds 2.7bn to pounds 3bn, will be launched before the end of this week.

Bass will have the right to pick off the prime sites from Allied Domecq's estate of managed pubs, giving it enough new outlets to fill its expansion needs for the next three years. The exact number will depend on Bass's ability to achieve a return of at least 15 per cent from its pounds 1bn investment.

The Bass link-up will step up pressure on Allied Domecq's executives to revoke their recommendation of the Whitbread bid. Under the terms of the Whitbread offer, Allied Domecq is required to pay a penalty of pounds 25m if the board withdraws its recommendation.

Directors may also seek a postponement of the vote on Whitbread's offer at an egm called for 2 July. The Office of Fair Trading winds up its examination of the deal, which will give Whitbread control of nearly 10,000 pubs, on 15 July.

Allied Domecq yesterday hinted for the first time that it would be receptive to an offer from Punch.

"If you will forgive the analogy, we have been made pregnant by Whitbread but that doesn't mean we are going to get married," said a spokesman.

Bass, which agreed to come in on the deal after an approach from Punch's advisers, wants to pick up well-known branded pubs such as the Firkin chain. The pubs would then be refitted and re-branded as part of Bass's existing brands, which include All Bar One, Harvester and O'Neills.

As part of its bid, Punch is preparing to offer shareholders a loan-note alternative to the cash offer, protecting some shareholders from a big capital gains tax liability. A separate scheme to avoid a corporate tax liability for Allied Domecq is being prepared by Arthur Andersen, one of Punch's advisers.

In a statement, Whitbread said a cash offer of pounds 2.7bn would be "well below the level which analysts have estimated is the full value of the Whitbread offer". The deal between Bass and Punch was "a temporary expedient to strip out value from the [Allied Domecq] assets."

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own