Grosvenor buys up six pubs: Acquisition-minded company launches rights as deals are announced

GROSVENOR INNS is accelerating its acquisition programme by buying six pubs, including the two Hedgehog and Hogsback outlets owned by David Bruce, the brewer who created the Firkin chain.

Mr Bruce, who joined Grosvenor as a director last October to head its Belcher Pubs subsidiary, has accepted pounds 400,000 in shares for pubs in Hove, Sussex, and Southampton.

The Hedgehog pubs lost pounds 21,000 in the 15 months to last June on sales of pounds 898,000. They are similar in size and style to pubs in Grosvenor's Slug & Lettuce chain and both sites have the benefit of small in-house breweries.

The other four pubs are being bought for pounds 3.3m cash from CH Webster & Sons, a family- controlled company based in Essex. All four are freehold properties and free of tie to any brewer.

This deal will be funded by a pounds 5.2m rights issue on the basis of three for five at 120p against yesterday's closing price of 170p, up 7p.

During the year to 30 September the Webster pubs turned round from losses of pounds 24,000 to profits of pounds 71,000 before tax on turnover of pounds 1.27m, up from pounds 1.2m.

The directors expect that increased discounts on purchases from breweries will result in an immediate improvement in the gross margins of the Webster pubs.

Grosvenor, which floated on the Unlisted Securities Market in May 1992 at 105p, said the remaining pounds 1.9m would probably be spent on more pubs in the next six months.

The company is developing its estates along three distinct lines - the Slug & Lettuce chain, taverns and the Belcher's offshoot, which will buy managed freehold outlets and turn them into tenancies.

On flotation the company had 30 pubs, of which 29 were leasehold. After yesterday's deals it will have 37, and nine will be freehold.

More important, particularly in terms of power for buying beer from big brewers, it has increased the free-of-tie content of the estate since it joined the USM from three out of 30 to 16 out of 37.

Mr Bruce said it was an excellent time to buy pubs, particularly in South-east England, where sites could be bought for a third and even a quarter of their cost at the height of the Eighties property boom.

Grosvenor also yesterday released its results for the six months to 27 November. Pre-tax profits rose from pounds 319,000 to pounds 403,000 on turnover ahead pounds 1m to pounds 4.5m.

The interim dividend is being increased 12.5 per cent to 2.25p and the company has forecast a near 12 per cent rise in the final payment to 4.75p.

Tim Thwaites, chairman, said: 'We are now seeking significant growth and I am encouraged by the opportunities for expansion in all of our divisions, both through acquisition and through improving trade in the existing estate.'