Bass to spend pounds 240m on new estate

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BASS, THE brewing and pubs group, plans to spend pounds 240m on redeveloping the pubs it will acquire from Punch Taverns as part of the pounds 2.75bn deal with Allied Domecq. The investment will be in addition to the pounds 950m Bass is paying for 550-650 of the Allied pubs if the Punch deal goes through.

Around 130 will be converted to branded restaurants such as Harvester, Vintage Inns and Toby Carveries. A further 130 will be redeveloped as branded bars such as the It's a Scream outlets aimed at students and the O'Neill's Irish pubs. Around 120 will become suburban taverns while 170 will be converted to City bars. This figure is likely to include the 40 Nicholson's outlets, which is the only Allied brand Bass will retain.

Tim Clarke, chief executive of Bass Leisure retail said: "The deal should give us a three-year to four-year pipeline of new outlets." It would take Bass' total estate to 2,900 pubs, well below its 4,750 ceiling introduced as part of the 1989 Beer Orders.

Bass says it was happy to team up with Punch after initially approaching Allied as early as January about the possibility of buying its pub estate. The company says it was equally happy to cede the lead role to Punch in order to avoid the consequences of an auction and the mud-slinging that eventually took place. "We would have felt uncomfortable in the middle of all that," Mr Clarke said.

Allied shareholders will vote on the deal on 23 August.

The tactic of entering a race late, possibly with a side deal, is one Bass has used before. When Bass' proposed takeover of Carlsberg Tetley was blocked by the Government, Bass struck a subsequent deal to emerge with a key Carlsberg-Tetley brewery. The group also came from behind to snatch the Inter-Continental hotel chain from Marriott. And when the Wolverhampton & Dudley-Marstons bid battle was in full swing, Bass struck a side deal with Marston's that would have seen it brew Wolves' beer brands if Marstons' had emerged victorious.

Altogether in the Allied deal Punch is taking control of some 3,550 pubs including the Firkin and Big Steak outlets, taking its total to 4,500. Punch is also buying Allied's 50 per cent stake in First Quench, an off- licence joint venture with Whitbread which includes Victoria Wine, and its 25 per cent stake in Britannia soft drinks.

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