W&D defence to build on cash return pledge

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The Independent Online

Wolverhampton and Dudley Breweries, Britain's largest regional brewer, will this week publish its defence against a £453m hostile takeover bid from Pubmaster, the privately-owned pub chain.

W&D is expected to reiterate its April pledge to return £200m, or 212p a share, to shareholders over the next two years. Ralph Findlay, the chief executive, will also highlight moves to drive returns from the firm's core assets, which include Banks and Pedigree ales and a strong community pub estate in the Midlands. He may also provide an update on the sale of the 70-strong Pitcher & Piano chain, expected to fetch more than £70m. W&D is rationalising its brewing operations from four to two breweries, in Wolverhampton and Burton-on-Trent. It is closing its Mansfield brewery, transferring its operations to Wolverhampton and the Camerons brewery in Hartlepool.

Analysts expect the defence document, which could be published as early as today, to attack Pubmaster's 480p-a-share offer for undervaluing the brewer. "If there had never been a bid, shares would probably be trading at 420p-430p. 480p is an insufficient premium to this," said one analyst, who added that a 530p offer could clinch the deal.

Pubmaster, which has said it would sell W&D's brewing assets, had previously offered 491p a share, which was rejected by the brewer's management.

The company has been in play since Robert Breare, the leisure entrepreneur, indicated his interest 10 months ago. Although Pubmaster's 480p-a-share offer represents a premium of 35 per cent to W&D's closing price of 355p on 11 August, when Mr Breare made his approach, the sector has since been re-rated and Wolves has improved its financial performance.

W&D's shares were unchanged at 476p on Friday.

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