About 500 jobs will go under yesterday's agreed pounds 480m bid by Greenalls for the Boddington Group pub chain. The deal, still to be approved by shareholders, would create a new group worth almost pounds 1.5m.
The merged group intends to close four offices in the Warrington area and half the 44 Boddington wholesale depots in north-west England to create savings of pounds 18m a year.
Greenalls is offering 17 new shares and pounds 20 in cash for every 25 shares in Boddington. As an alternative Boddington shareholders can opt for up to pounds 73.39p in cash and 5.13 shares for every 25 Boddingtons.
Boddington shares gained another 31p to 389p yesterday, after leaping 86p late on Thursday when Boddington confirmed the talks. After a late fall of 9.5p on Thursday, Greenalls shares fell a further 26.5p to 462p yesterday, which values the bid at pounds 480m and Boddington shares at 394p, 45 per cent more than they were trading earlier in the week. The enhanced cash option values them at 388.5p.
The bid will cost Greenalls pounds 16m, and reorganisation costs a further pounds 23m, half of which will pay for the redundancies. Buying out Boddington directors' options will cost a further pounds 8m. If shareholders accept the standard offer Greenalls will need to raise pounds 100m in cash and it will also assume pounds 124m of Boddington debt, which will raise group gearing from a little under 50 per cent to around 75 per cent, excluding any assets that might be disposed of.
Greenalls' chairman and chief executive, Andrew Thomas, forecasts profits of not less than pounds 100m in the year just ended, an improvement of 33 per cent, and a final dividend of 8.44p, which Boddington shareholders will also get. Analysts have been forecasting profits of pounds 43m for 1995-96 for Boddington.
Both groups disposed of their breweries as the industry restructured following the Monopolies Commission report in 1988 and have made good profits at the expense of the brewers thanks to an oversupply of brewing capacity. But the merger is necessary to maintain the pubs' purchasing power as the brewers rationalise capacity, according to Mr Thomas.