Punch swallows Avebury for £219m

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The Independent Online

Punch Taverns swallowed Avebury Taverns, the privately owned tenanted pubs group, yesterday in a £219m deal that expands its estate beyond the 8,000 mark.

It is buying Avebury's 409 pubs following a speedy auction. In May, Avebury, which was backed by the investment group Vision Capital, sold 253 pubs to Admiral Taverns for £69.75m. Giles Thorley, Punch's chief executive, said: "The deal was handed to us on a plate. They had recently sold the more eclectic properties leaving us the core. We did the deal in a week."

Analysts said the deal was unlikely to preclude Punch from bidding for Spirit Group, its former sister company. Punch has declined to comment on its intentions but industry watchers believe it would be keen to buy at least part of Spirit if it opts not to pursue an initial public offering.

Punch said it would fund the acquisition of Avebury, which includes £120m of debt, out of existing resources and the proceeds from a refinancing. It is also getting £26m of net cash.The deal, which will be completed next month, expands Punch's estate to8,200 pubs.

David Myers, Avebury's chief executive, will stay on to oversee the integration.

Punch said the deal would boost earnings in the first full year. It is targeting £3m in savings over two years, including £2m through cheaper beer. James Ainley, an analyst at Dresdner Kleinwort Wasserstein, increased his pre-tax profit forecast by 4 per cent to £241.8m for 2006.

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