Pub sale feeds Bass bid rumour

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SPECULATION rose yesterday that Bass, Britain's largest brewer, was preparing the ground for a takeover of the 1,500-strong chain of Chef & Brewer pubs, at present owned by Grand Metropolitan.

Marston, the brewer of Pedigree bitter based in Burton on Trent, Staffordshire, has bought 46 pubs from Bass. The move reduces Bass's estate of pubs to well below the ceiling imposed by the Beer Order regulations.

After yesterday's disposal Bass has 4,300 pubs, 200 below its maximum. To swallow C&B whole Bass would have to dispose of many more outlets in the near future.

However, some observers suggested yesterday that Bass's Beer Order-imposed limit could be circumvented. It might be possible for Bass to take on C&B if C&B's beer supply agreement with Courage were preserved.

This strategy could keep C&B - for which Grand Met wants about pounds 750m - at arm's length from Bass until disposals elsewhere in the portfolio allowed C&B to be fully integrated.

Marston is paying pounds 10.8m in cash for the pubs, 37 of which are managed houses, owned and run by Marston. The other nine are tenanted, meaning Marston will only draw rental income. The purchase will take Marston's managed estate to 230 and its tenanted estate to 664.

The average price per outlet is pounds 250,000, an indication that the pubs are at the smaller end of the range.

Andrew Holland, brewing analyst at the securities house Kleinwort Benson, predicts that the acquisition will have a positive effect on Marston's earnings from the outset. He has upgraded his forecast for the year ending next March from pounds 22.7m to pounds 23.3m.

Bass shares rose 5p to 511p yesterday. Marston stock fell back 3p to 291p.