Devenish accepts pounds 206m takeover by Greenalls: North-and-South deal will create Britain's second largest non-brewing pub company with more than 2,000 outlets

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The Independent Online
GREENALLS GROUP, based in Cheshire, is accelerating plans to become a national pub retailer by paying an agreed pounds 206m for Devenish, the Dorset chain that repelled a bid from Boddington two years ago.

The deal will swell Greenalls' estate from 1,497 to 2,047 outlets, ranking the company a close second among non-brewing pub companies to Pubmaster, which has 2,200.

Greenalls' geographic spread, largely concentrated in the North- west and Midlands, will be extended deep into the South-west, along the south coast and into London.

Industrial logic, however, became a side issue yesterday among analysts who believed that Greenalls had overpaid for Devenish, transformed since it saw off Boddington. The bid values each Devenish pub at pounds 400,000 against the last stated value of slightly more than pounds 300,000.

Greenalls' shares retreated 18p to 358p to stand just 8p above the price the offer has been underwritten in the City. That decline clipped pounds 8m off the value of its opening bid terms, involving a one-for-two share swap plus 394.5p nominal of convertible bonds in Greenalls.

Shares in Devenish spurted 85p to 367p compared with the 376.5p value placed on them by the share offer.

Geof Collyer, an analyst at NatWest Securities, said: 'The Devenish operation has been fully invested in and it is a very well-run business with no growth prospects other than by acquisition.'

Just two weeks ago Devenish admitted, when announcing a rise in half-year profit from pounds 3.95m to pounds 4.64m, that it had to address its seasonal trading imbalance.

Andrew Thomas, chairman and chief executive of Greenalls, said: 'Cost savings will not be difficult to achieve, and they are going to be significant.' First on the chopping list were Devenish's head office and treasury operations.

The merger was attacked by the Campaign for Real Ale pressure group, which said: 'The sellout of Devenish by its management is a betrayal of those shareholders who stood by the independence of the company when it was under threat from Boddington.'

Denis Cassidy, chairman of Boddington, is more than happy to accept the cash alternative of 356.5p being offered by Greenalls. Boddington has nearly 20 per cent of Devenish and will net a pounds 10m profit even after the costs of its failed bid of 210p a share. Greenalls already has the backing of directors and their families who own 26.36 per cent. Whitbread, with a 14 per cent stake, has yet to decide.

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