Punch trumps Whitbread with pounds 2.7bn offer

PUNCH TAVERNS, the pub group led by the entrepreneur Hugh Osmond, will formally launch a pounds 2.7bn takeover bid for 3,500 Allied Domecq pubs tomorrow, trumping an agreed paper offer from Whitbread.

After days of being bated by Whitbread to "put up or shut up", Punch said yesterday it had sent a proposal to Allied Domecq's directors outlining the cash offer for the pubs.

Allied Domecq issued a statement to the Stock Exchange after trading had closed. "[We] have now received a proposed offer from Punch Taverns to acquire Allied Domecq's retail business. The proposed offer reflects a cash price of pounds 2.7bn.

"The board of Allied Domecq is studying this proposed offer and, after receipt of the full terms and conditions, it will make a further announcement."

It is the first time Punch has officially confirmed the pounds 2.7bn figure. Mr Osmond has asked Allied Domecq to respond by Thursday, giving him time to reach shareholders before 2 July, when they vote on the Whitbread bid.

On Monday Bass, the leisure giant, confirmed it was in talks to back the offer, saying it will buy pounds 1bn-worth of managed pubs if Punch wins the takeover battle. Texas Pacific Group, Punch's majority shareholder, is providing pounds 340m of equity backing.

Mr Osmond claims to have met Allied Domecq's insistence that any bid must meet a string of conditions, including assurances of no big tax liabilities for either Allied Domecq or its shareholders.

Whitbread has lost some ground in the takeover battle following sharp falls in its share price. The shares closed yesterday at pounds 10.45, theoretically devaluing its paper offer to around pounds 2.35bn.

The fall followed a 4.7 per cent dip in Whitbread's share price on Friday. City sources said it was caused by a string of sell-orders released at the last minute on Friday, when trading was thin.

Whitbread played down reports that it was calling for a full Stock Exchange investigation into the dealings. Instead, it had merely asked the exchange to monitor future dealings in its shares, because of "press speculation".

The spokesman added that the group was unfazed by the higher Punch offer. "This offer is at a level which we do not believe is competitive with our own share-based proposal.

"The value of the offer is obviously dependent on our share price. But we do believe it offers good value and we remain confident that it will be voted through on 2 July."

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