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Whitbread offloads Beefeater

WHITBREAD has offloaded 40 of its Beefeater restaurants to a management buy-in team and a consortium of venture capitalists, led by NatWest Equity Partners (NWEP), for pounds 36m.

The Crowded House Pub Company, as the new group will be called, plans to scrap the Beefeater restaurants at the sites and introduce a new chain of pub restaurants. It also plans to double the size of its business over the next three to four years by acquiring about 10 new sites a year. Crowded House could then look to float on the stock market, or sell out to a larger operator.

Crowded House will be run by Bernard Wright, a 48-year-old former Whitbread employee, who has worked at the group's pub business and for the last few years has specialised in strategic planning. He said yesterday: "We want to take the pubs away from the frozen chips and steak market to concentrate on fresher food in a more relaxed atmosphere because that it where the market is going."

The venture capitalists have been attracted to the deal by the rapid growth in the pub food sector in the UK. Over the past few years the UK pub food market has grown at twice the rate of the restaurant market and NWEP reckons that almost two-thirds of those people who choose to eat out do so in a pub.

Mr Wright added: "We are delighted to have secured this outstanding opportunity and we believe these pubs are the finest selection of food-led properties to have been made available in recent years. Crowded House is well placed to develop fully their potential in the growing pub-based eating-out market."

David Thomas, Whitbread's chief executive, said: "This sale is part of our continuing strategy to dispose of non-core assets, which in 1997/98 realised pounds 144m. The outlets we have sold, whilst trading profitably, no longer fit Beefeater's brand profile."

However, he maintained that the company remains totally committed to the Beefeater brand and will be opening six new sites during this financial year, with another 10 sites acquired for completion in 1999.

The pub sector has burst into life over the past 12 months, with a flood of deals leading to the emergence of a host of new and acquisition hungry chains.

NWEP has invested nearly pounds 170m in the leisure sector over the past few years, including the acquisition of Pubmaster, the pub retailing subsidiary of Brent Walker, in a deal worth pounds 171m in 1996, and the pounds 49m buy-out of First Leisure's bingo division earlier this year.