Barclay brothers join £3bn auction for pubs group Spirit

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The Independent Online

The Barclay brothers, the owners of The Daily Telegraph and London's Ritz hotel, yesterday threw their hats into the ring for Spirit Group, the country's biggest privately owned pub group.

A bid from Sir David and Sir Frederick Barclay is thought to be competing against offers from the listed pub company Punch Taverns, Clearbrook Capital, the private-equity firm headed by the former WestLB buyout specialist Robin Saunders, and the Iranian property tycoon Robert Tchenguiz.

The famously private Barclay brothers have amassed an estimated £1.7bn from years of property, shipping, brewing and travel deals. They paid themselves a dividend of £711m last year from the Littlewoods stores and catalogue shopping chain they bought two years ago for £750m.

The investment bank Merrill Lynch is sizing up offers for Spirit, which is expected to fetch between £2.5bn and £3bn.

Spirit boasts more than 1,800 managed pubs, including the Chef & Brewer and John Barras chains. It is owned by a consortium of private-equity firms that includes Texas Pacific and Blackstone. They kicked off an auction for Spirit after receiving several unsolicited approaches.

Before the late arrival of the Barclay brothers, experts expected either Punch or Mr Tchenguiz, who already owns a huge pub empire through his private company R20, to win Spirit. He is working with Barclays Capital, which helped him finance a deal to buy Somerfield supermarkets.

Punch is the only bidder thought capable of pushing a deal though before Christmas. It has expanded rapidly over the past two years, scooping Pubmaster's 3,100-plus pubs in November 2003, InSpired's 1,064 pubs last September and Avebury, with 409 pubs, in July. But it remains the second-biggest player in the sector behind Enterprise Inns, with almost 9,000 pubs.

Spirit represents one of the last remaining opportunities to swallow more than 1,000 pubs in a single gulp. Punch is no longer working with its rival Mitchells & Butlers on a joint bid, but if successful may well still sell M&B parts of the Spirit estate.

Ms Saunders is working with Dresdner Kleinwort Wasserstein and has sounded out Belgian beer giant InBev about getting behind her bid. Should none of the offers match Spirits hopes, its owners may choose instead to float the business.