Punch could upset Allied pubs deal

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The Independent Online
PUNCH TAVERNS, the privately owned pub operator is considering appealing direct to Allied Domecq's shareholders in an attempt to muscle in on the group's plans to sell its pubs to Whitbread for pounds 2.5bn.

The group, which runs more than 2,300 pubs, has been trying to open discussions with Allied for months and claims it could offer a higher price.

Hugh Osmond, chairman of Punch, said: "All we are saying is, `Listen guys we might be able to give you more money for this business.' They ought to welcome us with open arms. It is bizarre." Mr Osmond said Punch Taverns would also been interested in Allied's Dunkin' Donunts and Baskin Roberts food businesses.

Allied said that if and when Whitbread makes a formal offer, its period of exclusivity would lapse allowing others to enter the fray. It also claimed that the all-share structure of the deal with Whitbread meant Allied's institutional shareholders would escape a heavy capital gains tax liability.

The stock market responded warmly to the deal, marking Allied Domecq shares 12 per cent higher at 543p with Whitbread up almost 3 per cent at 1086p.

Analysts said Whitbread, which reports full-year results today, would be able to secure cost savings of around pounds 40m a year from the deal. There would also be operational efficiencies with a reshuffle of the formats and increased investment in the neglected Allied estate. Whitbread's managed pubs enjoy sales some 50 per cent higher than Allied's portfolio, leaving plenty of room for improvement. Whitbread is also likely to look at the Allied pubs' onerous beer supply deal with Carlsberg-Tetley.

The sale would leave Allied Domecq as essentially a spirits business with brands like Ballantines scotch and Beefeater gin. It could make the group more attractive to a merger partner.