Whitbread buys Pelican for pounds 133m

Click to follow
The Independent Online
Whitbread yesterday bought the Pelican chain of branded restaurants for pounds 133m and immediately defended the price it was paying, which included pounds 100m of goodwill. The deal will net pounds 12m for Pelican's largest shareholder, Robert Earl, and make more than pounds 2.8m apiece for the company's chairman and managing director.

Peter Jarvis, chief executive of Whitbread, said the acquisition was "a perfect strategic fit" for the brewing and leisure giant. It takes the company into what it described as "urban casual dining", an area that, despite its wide-ranging interests in restaurant brands from Beefeater to Pizza Hut, it had little exposure to.

Pelican, which runs about 100 themed restuaurants and bars trading mainly under the Cafe Rouge and Dome brands, is strongest in London where Whitbread also has a relatively low representation.

Whitbread said it plans to roll out up to 40 new restaurants a year to take Pelican from 100 outlets to 300 within five years. Pelican's founders Roger Myers and Karen Jones will remain with the company despite their windfalls, although Mr Myers will step down as chairman to be replaced by David Thomas, who currently runs Whitbread's restaurants and leisure division.

Mr Myers said selling out to Whitbread was the logical solution to Pelican's cash constraints which would have almost certainly required a rights issue later this year to fund expansion. Pelican grew from nothing to 100 sites in a little over six years.

Whitbread said the UK eating out market had grown from a value of pounds 16bn in 1991 to pounds 21bn currently. Forecasts from the Henley Centre predict a further increase to pounds 30bn by the year 2000. More than one-third of total food expenditure is now represented by eating out, which, although it has risen sharply in recent years, is still a considerably lower proportion than in the more mature US market.

Within that market, Pelican has targeted a particularly fast-growing segment, aimed at relatively wealthy urban diners who, according to Whitbread, "eat when they are out, rather than go out to eat".

Pelican has been one of the restaurant sub-sector's success stories since coming to the market in 1990. After a hesitant beginning during recession, the shares have risen sevenfold since the start of 1993 as profits grew quickly to last year's pounds 7.5m from sales of pounds 52.1m.

The offer of 170p a share represents a 17 per cent premium over the 145p at which Pelican shares closed on Monday. Confirmation of the acquisition yesterday sent them 22.5p higher to 167.5p.

Investment column, page 18

Eating out boom, page 20