Whitbread strikes back at Punch `vandal' gibe

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The Independent Online
ALLIED DOMECQ will today decide whether to recommend Punch Taverns' raised pounds 2.875bn cash offer for its pub estate after Whitbread yesterday sought to bolster its share price to support its recommended cash and shares bid worth pounds 2.83bn. Punch's offer expires at midnight.

Whitbread attacked Punch's suggestions that its bid would "vandalise" shareholder value. It accused Punch of creating uncertainty in an attempt to depress its shares. "Whitbread is confident this offer is creating value for the company and will be earnings enhancing in the first full financial year after completion," the company said in a statement. "Whitbread's offer is also underpinned by our legally binding contract with Allied Domecq. Allied Domecq shareholders are the real judges of value."

A Whitbread spokesman added: "Punch has tried to cast doubt on the wisdom of what we're doing. We have to meet their criticisms because they have an effect on the share price."

A spokesman for Punch said: "It's a tired response from tired people. The one thing we agree on is that Allied Domecq shareholders will be the real judges of value."

The City failed to deliver a clear verdict on Whitbread's raised offer on Friday, which came within an hour of the market's close. "There was Wimbledon and it was Henley Friday. It's not like every fund manager who would make a decision was there. [Today] is an important day," said a Whitbread spokesman.

Whitbread's shares closed up 9p at 1001p in thin trading. A strengthening of its shares today would put pressure on Punch Taverns to further raise its bid to secure a recommendation from Allied's board.

An Allied insider said yesterday: "There will be meetings on Monday [today]. One needs to look at what the Whitbread shareprice does and how Punch reacts to that."

Whitbread is not ruling out taking Allied to court for "loss of transaction", which could result in a significant damages award, if it backed Punch's bid. A switch of recommendation by Allied would also generate a pounds 25m fee to Whitbread.

David Reed, Whitbread's director of corporate affairs, said: "Whitbread is more interested in doing a deal than in going to court."

Meanwhile, Punch again advertised its resolve in its bid for the pubs. "If a little tweaking of the offer is necessary we can do that," said its spokesman.

Mr Reed said: "We're not playing the `mine's bigger than yours' game."

The upping of Whitbread's earlier pounds 2.3bn paper offer on Friday followed a search by the group's pub operators for additional cost savings, said to have boosted the deal's annual cost savings from pounds 100m within three years to at least pounds 125m. Punch dismissed the idea Whitbread had unearthed new savings. "They can't have found anything new after five months," it said.

Both sides also said the other's offer risked being blocked by the Office of Fair Trading.

Whitbread admitted it may be required to reduce its concentration in certain licensing districts to meet OFT concerns. "If Whitbread is so confident of receiving OFT approval, why has it not made its offer unconditional?" Punch said.