Yates to back £98m buyout by managers

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The Independent Online

Yates Group, the owner of Yates's Wine Lodges and the Ha Ha Bar & Canteen chains, is to recommend a 140p-a-share management buyout offer this week, backed by US private equity house, GI Partners.

Yates Group, the owner of Yates's Wine Lodges and the Ha Ha Bar & Canteen chains, is to recommend a 140p-a-share management buyout offer this week, backed by US private equity house, GI Partners.

The offer, which will value the company at £98.4m, is at a 42 per cent premium to the company's average share price over the past 12 months, and is expected to be welcomed by the group's investors.

The stock has suffered from liquidity problems as well as difficult conditions in the pub sector over the past few years, with its shares collapsing in 2002. After hitting lows of 49p in April last year, it recovered slightly, but still remains a long way short of its 1998 highs of more than 550p.

GI Partners said it believed it was backing a very strong management team that was committed to earnings growth over the longer term.

An announcement of the deal is set to be made formally at the company's annual results on Wednesday. Having indicated a recovery in sales over the past few months, the group has hinted that profits are set to come in at the top end of analysts' forecasts. Shares in the company were up more than 4.5 per cent on the news yesterday, to 136p, following a rise of 30 per cent last week when news of the bid first emerged.

Investors in the group - which include Man Group, Canada Life, Legal & General and Cazenove - are expected to accept the offer, which represents a two-year high for the company's share price.

The deal will be GI's first foray into the UK pubs sector. Its other two UK investments are Camperdown House, a Scottish listed building, and a chain of psychiatric homes, which it bought last year.

Yates, which is based in Bolton, employs around 4,000 people in the UK across almost 150 pubs and bars. It recently spent more than £17m giving a face lift to 98 of its pubs.

Its 21st century Yates's bars, which have plasma television screens for sporting matches and a more contemporary design, have helped to turn the group's fortunes around in recent months.

The entire pubs sector has suffered over the past few years as people have taken to going out less in the week.

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