Alchemy lines up £1.5bn bid for Whitbread pubs

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The Independent Online

Alchemy, the venture capital firm that abandoned talks to buy Rover from BMW earlier this year, has emerged as an early contender in the battle to buy Whitbread's 3,000 pub estate, which was put up for sale last Thursday.

Alchemy, the venture capital firm that abandoned talks to buy Rover from BMW earlier this year, has emerged as an early contender in the battle to buy Whitbread's 3,000 pub estate, which was put up for sale last Thursday.

Jon Moulton, chief executive of Alchemy is thought to be considering making a bid of about £1.5bn for the pubs.

However, Alchemy is expected to face heavy competition for the estate, which includes the Hogshead and Dome brands, as Whitbread is believed to have already attracted interest from possible bidders running into "double digits".

A spokesman for Whitbread said yesterday: "Since the announcement of the sale last week we have received approval from the City and we expect there to be considerable interest from bidders." The spokesman refused to confirm that Alchemy was among the initial approaches and said that Whitbread and its advisers Dresdner Kleinwort Benson have not yet entered into formal discussions with any parties.

Mr Moulton declined to comment yesterday. However, sources said Alchemy was a particularly strong contender because of the strategic fit of the two businesses. Alchemy already owns the Innspired Group of 1,000 pubs. Mr Moulton has long made it known he wishes to expand Alchemy's leisure interests.

Of the 3,000 pubs on sale, 1,710 are leasehold and 1,095 are managed. The leasehold ones would give Alchemy low-cost access to capital as two-thirds of income from leased pubs comes from rent, which could be used to finance other projects.

Alchemy would not have to buy Whitbread's entire pubs division as the company has said it is happy to carve it up, depending on what offers it receives.

Last year Alchemy teamed up with Nomura, the Japanese investment bank, to bid for Allied Domecq's estate, which later fell to Punch Taverns. The company is understood to have considered Greenalls' 900-strong estate, which sold to Scottish & Newcastle last year. Nomura and Punch Taverns, headed by entrepreneur Hugh Osmond, are now the UK's two largest landlords.

Whitbread is selling its pubs division to concentrate on hotels, fitness and restaurants divisions.

The group defended its decision to sell its pubs at a time when Wolverhampton & Dudley, Bass and Scottish & Newcastle are also trying to dispose of pubs.

Whitbread is also expected to announce further intentions to sell off parts of its business when it publishes the results of a strategic review at its half-year results on 31 October.

Restaurant chains Cafe Rouge, TGI Friday's and Pizza Hut are thought to be lined up for the chopping block.

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