The £2.3BN auction of Scottish & Newcastle's pubs estate will enter its second phase tomorrow when at least seven bidders are expected to submit second-round offers for the 1,450-strong chain.
Eleventh-hour negotiations between the contenders are expected to see some of the non-trade bidders team up with some of their trade rivals, industry sources said yesterday.
The billionaire brothers Simon and David Reuben, who were surprise last-minute entrants to the bidding process, are thought to be leading the chase for the S&N estate, having submitted the highest indicative offer late last month. Analysts expect the estate to fetch as much as £2.5bn, £200m above book value.
The three venture-capital backed pub groups - Pubmaster, Laurel and Spirit - are still in the running, as is Mitchells & Butlers, the All Bar One owner spun out of Six Continents earlier this year. Laurel, which is working with the Japanese bank Nomura, is understood to have held talks with the Indian-born Reuben brothers, who have recently also run a slide rule over Selfridges, Safeway and Six Continents.
Competition has been fierce for S&N's estate, which includes the Chef & Brewer, Rat & Parrot and Premier Lodge brands. The group, which brews John Smith's, Kronenbourg and Foster's, is the last major British pubs group to split its brewing and pub operations.
The other contenders include PAI, the French private-equity group, and a joint bid from CVC/Cinven, also venture capitalists. BC Partners has already teamed up with Pubmaster, while Texas Pacific, which has a stake in Punch Taverns, is working with Spirit, the managed pub group demerged from Punch last year.
Although S&N, which is keen to amass a war chest to expand its international brewing operations, will receive the second-round bids by midday tomorrow, it expects to take up to 10 days to come up with a short list. How many will be on this will depend on the nature of tomorrow's indicative offers, which are likely to include several conditions.
The final stage will see Tony Froggatt, S&N's recently appointed chief executive, sit down with the remaining two or three bidders to hammer out details such as a contract to buy beer from its brewery. An outcome is expected towards the end of October, although a final deal will need competition clearance from Brussels.Reuse content