Takeover of Yates nears collapse as deadline set

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The Independent Online

The takeover bid for the bars group Yates looked to be close to collapse yesterday as GI Partners, the US-based private firm which is backing the management buy-out, gave shareholders until next Thursday to accept its 140p-a-share offer.

The takeover bid for the bars group Yates looked to be close to collapse yesterday as GI Partners, the US-based private firm which is backing the management buy-out, gave shareholders until next Thursday to accept its 140p-a-share offer.

GI announced yesterday that it had received acceptances representing just 16.7 per cent of the company's shares, compared with the 90 per cent it wanted in order to make the bid unconditional. Yates shareholders now have until 3pm on 22 July to accept the offer, which values the high street bars group at £93m. Should shareholders fail to respond, GI has said it will "consider the options available to it".

Analysts were in little doubt that the private equity firm would walk away if shareholders did not accept the cash on the table. GI is believed to have held talks with the Laurel Pub Company and Spirit Group - both privately owned - with a view to buying their high street pubs. Given the turmoil in this sector at present, Yates shares are tipped to fall sharply should the bid fail. This worry sent the group's stock 4.5p lower to 130.5p yesterday. Earlier this week, JD Wetherspoon issued a profit warning, blaming tough trading conditions, while Regent Inns said it would have to halve its final dividend as it struggled to cope with falling sales.

Key to the future of GI's bid, which is through a specially created company called Thorium, is the position of the founding Dickson family. It controls 30 per cent of Yates and although the stake is dispersed among a large number of individual family members, they are all expected to act in unison. As yet, no member of the founding family is thought to have accepted GI's bid.

Another important player in the takeover saga is Commerzbank. The risk arbitrage desk of the German bank, which looks to make money from bid situations, has built up a 12.5 per cent holding in Yates since news broke of GI's interest at the start of last month.

Analysts believe that Commerzbank is either betting on a counter offer for Yates from another player or that it will be able to force GI into paying a higher price. The bank's trading record certainly supports this theory. In the process of amassing its holding, Commerzbank has on several occasions paid above GI's 140p-a-share offer price.

Over the past few years, Yates shareholders have had to swallow a series of profit disappointments. In its full year results statement in June, the owner of Yates's Wine Lodge and Ha! Ha! chains said like-for-like sales at its Yates brand were down 3.9 per cent but boasted of a 1.6 per cent rise in sales from its refurbished sites. It reported steady revenue growth at the Ha! Ha! chain.

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