Wolves set for bidding war over Morland

Click to follow
The Independent Online
A SECOND three-way bidding war threatened to break out in the drinks industry yesterday when Wolverhampton & Dudley indicated that it may trump Greene King's pounds 145m takeover of Morland.

The bidding war underlined the turmoil in the brewing industry as Swallow Group finally announced the sale of most of its pubs to Pubmaster Inns, a dedicated owner of tenanted public houses.

Wolverhampton & Dudley, which recently emerged victorious from a hostile takeover of Marston Thompson & Evershed, said it had requested information from Morland relevant to a possible bid.

In a Stock Exchange statement, the group said it had made the request "with a view to investigating the possibility of making an offer at a higher price than that already recommended by the board of Morland".

Greene King has offered 445p a share for 285 tenanted pubs and 123 managed houses, plus the right to brew the cask ales Old Speckled Hen and Ruddles. It hopes to realise synergies of pounds 6m to pounds 8m a year.

Wolves has been encouraged by a widespread City view that Greene King is getting Morland's assets at a knock-down price. Morland has been under pressure to strike a deal after posting a disappointing plunge in profits.

To capture the Morland pubs and beer brands, Wolves is likely to offer at least pounds 160m. Greene King has secured 25.5 per cent in irrevocable acceptances from Morland shareholders, which can only be withdrawn if a rival bid comes in at more than 490p a share. Wolves is already laden with heavy debts following the purchase of Marston's, and is seeking to dispose of 300 pubs to reduce its debts. Greene King itself is buying 165 pubs.

Even after the disposals, Wolves is expected to have gearing of more than 90 per cent. But analysts said the savings flowing from a deal may be great enough to justify further debts. "We think Wolverhampton & Dudley could easily take out savings of pounds 10m ... Morland is too cheap at the moment," said one.

Separately, Swallow Group said it was recommending a pounds 127.5m bid for 662 of its pubs from Pubmaster.

The sale marks a key stage in Swallow's transformation from brewer and pub owner to focused hotels and inns group. It also gives Pubmaster control of more than 2,100 pubs and a presence in the north of England, and follows the failure of two management buyouts by Paul and Frank Nicholson, whose family founded Swallow, then known as Vaux, in the 19th century.

Shareholders rejected attempts by the brothers to save two breweries in Sheffield and Sunderland. Advisers said Swallow would get better value by closing the breweries and selling the pubs. The breweries, which made Double Maxim, Samson and Ward's bitter, will close on Friday. Peter Catesby, chief executive of Swallow, said two thirds of the 460 redundant staff had already taken early retirement or found other work.

Comments