Pubs for sale as Swallow rejects management offer

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The Independent Online
SWALLOW GROUP, the former Vaux pubs and hotels company, has put its entire estate of 664 tenanted pubs up for sale after rejecting a pounds 125m management buy-out offer that could have saved the group's two breweries. The decision reflects Swallow's plan to concentrate solely on its hotel and managed-pubs interests.

The company said it would consider offers for all or part of the pub estate, with or without the breweries in Sunderland and Sheffield which will otherwise close on 2 July with the loss of 750 jobs. Redundancy notices were due to be issued to staff this week.

Swallow said the move was prompted by expressions of interest from potential buyers for the pubs. These are thought to include interest from Pubmaster, the privately owned Hartlepool based company, and Enterprise Inns, as well as financial buyers such as Nomura which has bought a string of pub chains in the past few years. Swallow's move could also rekindle the interest of Alchemy, the venture capital group that backed the failed management buy-out team for the breweries. It already owns the brewing company Ushers of Trowbridge.

The 664 pubs are a mix of 468 Vaux pubs, and 196 under the Ward's name. Their value is thought to be in excess of pounds 100m; the pubs made operating profits of pounds 11.7m last year. Swallow is expected to use the proceeds to build up its hotels operation and its managed-pubs business which includes the Bramwell and BarCentral brands.

The move to sell the estate comes after Swallow rejected two revised offers from the management of the two breweries, led by Frank Nicholson, the brother of the former chairman. The plans to sell the breweries had developed into a lengthy saga which saw three directors leave the board. These included the former chief executive, Martin Grant, who was ousted from the company after opposing the original buy-out plan. He said it undervalued the brewery assets.

The sale of the pubs and the closure of the breweries will leave Swallow exposed as a takeover target, analysts say.

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