Gibbs Mew buys pub independent: Pounds 31m takeover of Centric gives Salisbury brewer 197 more outlets

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The Independent Online
GIBBS MEW, the Salisbury- based company formed by the merger of two breweries nearly 100 years ago, is buying Centric Pub Company in a deal worth just over pounds 31m.

Centric, born out of the Government-enforced sale of 11,000 outlets owned by the big brewers, is the first of the new-style pub independents to be taken over.

The deal values each of Centric's 197 pubs, most bought from Bass in 1992 in the Midlands and North-west, at pounds 157,000. Gibbs has 121 pubs, mainly in the South.

Gibbs also yesterday reported a sharp recovery in pre-tax profits from pounds 1.04m to pounds 3.05m for the year to 2 April. The result reflected increased trading, better margins and a fall in net interest charges from pounds 1.7m to pounds 1m. The final dividend is 5p (3.75p), which lifts the total from 7.5p to 8.75p. Gibbs hopes soon to move from the Unlisted Securities Market to a full listing.

In the year to 26 March, Centric made pre-tax profits of pounds 1.7m after pounds 2.3m of interest charges.

Some pounds 12.8m of the acquisition cost is being funded by the issue of 3.2 million shares in Gibbs at 400p each. The remainder is made up of Centric's outstanding debts.

Gibbs will reduce debt in the enlarged group by asking shareholders for pounds 13.6m via a two-for-three rights issue at 340p a share. This compares with yesterday's closing price for Gibbs of 389p, down 29p.

The Gibbs family will take up a small part of their rights entitlement, thus further loosening their grip on the company to a holding of 24 per cent, from 40 per cent. Two years ago the family controlled more than 50 per cent.

Existing combined debts of pounds 34m will fall to pounds 20m after the merger, equal to 50 per cent of enlarged shareholders' funds. The debt reduction includes the conversion of loan stock, held by Centric's three biggest shareholders. They are Montagu Private Equity, Mercury Asset Management and Lloyds Development Capital, which will have stakes of 10, 8 and 4 per cent respectively in the enlarged group.

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