Alchemy's £350m pubs tag is unInnSpired

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The Independent Online

Jon Moulton's private equity firm, Alchemy, could be forced to take a loss on its investment in pub chain InnSpired after failing to find a buyer prepared to pay its £350m price tag.

Alchemy has held talks with three potential bidders - Punch, Pubmaster and County Estate Management - but they have come to nothing. The price discussed with the three companies was understood to range from £320m to £350m. The firm is now in talks with four other suitors but an Alchemy insider believes a deal is unlikely.

Around £250m of the asking price is understood to be debt. One industry player, who is familiar with the business, said: "No one is going to pay £100m plus for the equity." The source added that a more realistic price would be "just under £300m".

But dropping the asking price is not a viable option for Alchemy: should the firm sell for £300m or less, it would make a loss. The Alchemy insider conceded: "This will never be a very good deal for us."

Consolidation has been ripe in the pub sector over the past few years. Scottish & Newcastle recently sparked massive interest when it put its 1,450-strong retail estate up for sale; the auction was eventually won by Spirit and its private equity backers, Texas Pacific and Blackstone, for £2.5bn. Another recent deal saw Punch create a 7,400-strong chain by purchasing Pubmaster for £1.2bn.

InnSpired, a chain of around 1,100 pubs, was formed when Ushers of Trowbridge, which Alchemy bought for £108m, was merged with pubs purchased from the Alehouse Company in 1999.

Alchemy is understood to be looking at other options in case it fails to secure a buyer, such as increasing InnSpired's debt levels. The firm is also considering simply holding on to the asset.

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