S&N close to £700m sale of Center Parcs to French

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The Independent Online

Scottish & Newcastle, the UK's second biggest brewer, yesterday said it was close to completing the drawn-out sale of its leisure division, which is expected to raise about £730m.

Scottish & Newcastle, the UK's second biggest brewer, yesterday said it was close to completing the drawn-out sale of its leisure division, which is expected to raise about £730m.

Addressing the group's annual general meeting, Brian Stewart, S&N's chairman, confirmed that the board was in exclusive discussions to sell its Center Parcs holiday business, thought to be worth about £700m, to Pierre et Vacances of France and DB Capital partners, a subsidiary of Deutsche Bank. Meanwhile, the lossmaking Pontin's resorts are expected to be bought by Manor Parcs Limited, a private vehicle fronted by the leisure entrepreneur Trevor Hemmings, for about £30m.

A spokesman for S&N said: "We would hope to have completed the Center Parcs sale by the end of October and Pontin's by the end of September." The leisure businesses were first put up for sale on 29 February this year. Mr Stewart said it was envisaged that the three UK Center Parcs would be acquired by DB Capital, while the 10 European sites would be jointly controlled by DB and Pierre et Vacances through a 50/50 holding company.

The sale of Pontin's to Mr Hemmings, who also owns the Blackpool Tower and the former Littlewoods Leisure unit, includes eight family centres and the head office in Chorley, Lancashire. Of the remaining seven sites, three have been transferred to Center Parcs, one is subject to a sales contract, two further sites are under offer and one, in the Republic of Ireland, is about to be auctioned off.

One analyst said: "It was about time they got rid of the leisure business. But that is not the main issue for Scottish & Newcastle now." Along with the update on the leisure sale, the group issued a disappointing trading statement, which sent the shares down 1.5p to 461p. Since 1 May, total volume sales have fallen by 1 per cent as UK beer consumption declines, despite a five per cent increase in sales of the group's top brands, including Kronenbourg and John Smith's.

The group also admitted that the previously-announced rationalisation of its pub estate would now be "more extensive than indicated", causing analysts to downgrade their full-year forecasts from £464m to £448m on concerns about possible dilution. S&N had intended to dispose of 300 outlets from its 2,000-strong portfolio, but is now expected to raise that number to 400.

One analyst said: "Either they totally underestimated just how inclement the UK pub industry is now, and it is very bad, or they miscalculated the length of their tail." The analyst said the best solution for S&N would be to dispose of its pubs interests entirely and focus on growing its European brewing business. The group has already paid £1.7bn to acquire Danone's Kronenbourg and Kanterbrau brands and a further £93m for a 49 per cent stake in Centralcer of Portugal.

There was more disappointment when Mr Stewart said that the expected uplift from the former Greenalls pub estate, bought for £1.1bn by S&N in December, had been "slower than anticipated".

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