Yates set to make £60m bid for Slug and Lettuce owner

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The Independent Online

Yates, the wine bar group, is expected to submit an offer in the region of £60m by the end of the week for the company that owns the Slug and Lettuce pub chain.

Yates, the wine bar group, is expected to submit an offer in the region of £60m by the end of the week for the company that owns the Slug and Lettuce pub chain.

It is understood that Yates is keen to win full control of SFI Group, which also owns the Litten Tree and Bar Med brands and came near to collapse last year. However, Yates is facing substantial competition for SFI's brands, such as that from Robert Tchenguiz, who recently made a number of pub acquisitions, including the Laurel Pub chain.

Preliminary offers for SFI are due at the end of this week. A spokesman for Kroll Corporate Finance, which was appointed by SFI's board to look at options for the company, said: "The process is ongoing. One possibility is that we go ahead with a sale and we have already received expressions of interest from both private equity and trade buyers. We are still assessing that interest and the process will take a number of months to complete."

Regent Inns, the owner of the Walkabout chain and Jongleurs comedy clubs, is thought likely to show interest in SFI. Trading in its bars has been dire in the past year, but a new management team has ambitions for Regent, which, without a takeover, may succumb to a bid itself.

SFI recently reported an improvement in trading, which has sparked confidence in the management team to look at options for its future. The company delisted in April 2003 after it was found to have a £20m black hole in its accounts. It survived via a debt-for-equity swap but in January Stuart Lawson, who was brought in to turnaround the business, said like-for-like sales were up 2 per cent. It has debts of about £70m and may opt for a refinancing as an alternative to a sale.

SFI's 157-strong Slug and Lettuce division would be seen by Yates, which was taken private by the US venture capital group GI Partners, as an attractive fit with its Ha! Ha! outlets, which have a substantial food offering. The two groups have similar till systems to SFI's and it is thought Yates could make significant cost savings from a tie-up with SFI.

But industry sources believe there is a major drawback to the sale of SFI and its brands as most of its properties are owned under leasehold agreements. With most of its venues in city centres, it is thought that a number of its properties are struggling under onerous rents. High street trading, where there has been a bitter price war, is also still difficult.

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