S&N deal restores Cannon to pub trade: Magic Pub Company and Labatt's pay pounds 108m for 450 Chef & Brewer outlets

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The Independent Online
MICHAEL CANNON, former chairman of Devenish, has returned to pub retailing by buying 282 Chef & Brewer outlets from Scottish & Newcastle.

S&N has also sold 168 Chef & Brewers to Labatt's, the Canadian brewer that has built up a 358- strong estate since moving into the British market three years ago.

The total value of both deals is pounds 108m. Industry analysts estimate that Mr Cannon's newly formed Magic Pub Company paid about pounds 80m for its pubs.

'I was going to retire, but I became totally bored. My wife Sally thinks I'm mad,' said Mr Cannon, who last year took a pounds 26m profit from his shares in Devenish, sold to Greenalls for pounds 214m.

His partners include Philip Snook, managing director and holder of the same post at Devenish, and Tom Gill, finance director.

Magic Pub is 55 per cent-owned by Mr Cannon, 10 per cent by management and 35 per cent by the venture capital group CINVen, which has underwritten pounds 23m of the company's pounds 100m of financing.

S&N bought 1,654 Chef & Brewer pubs from Grand Metropolitan for pounds 736m last September. The legislative Beer Orders have forced it to sell half of them. S&N said interested parties were looking at the remaining 270 pubs that have to be sold.

Magic Pub will spend pounds 15m over three years on refurbishment. Mr Gill said development costs had been factored into the deal.

'This is not a typical managment buy-in. There is no obligation to float,' he said. 'We don't have to sweat in the first few years to reduce debts. We will be cash-generative from day one.'

Mr Cannon said: 'The pubs have been tossed around like a cork in a wild sea and have underperformed for quite a while.

'Food sales in the pubs are 50 per cent below the national average at 8 per cent of turnover. This is an area we will attack.'

All the pubs being sold by S&N are free of tie and are mainly in London, the Midlands and the North-west. Magic Pub is negotiating beer supply agreements with big and regional brewers.

Labatt's pub estate is split into two companies - Maritime Taverns with 133 in the South and Maple Leaf Inns with 160, mainly in the Midlands and North-west.

(Photograph omitted)

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