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Morning Briefing for pub, restaurant and food wervice operators

Thu 12th Oct 2017 - Stonegate declares 203p per share offer for Revolution as final
Stonegate declares 203p per share offer for Revolution as final: Stonegate Pub Company has declared its cash offer of 203p per share for Revolution Bars Group as final. Stonegate stated: “Stonegate notes the announcement released by Deltic Group on 10 October confirming it does not intend to make a cash offer or merger proposal for Revolution. The licensed retail industry has faced a number of challenges over the past 12 months, many of which are likely to persist for some time. These include rising input costs, National Living Wage, the Apprenticeship Levy and the new rates regime. Late-night business has also suffered from the uncertain consumer environment and increased licensing regulation. In this context, the board of Stonegate recognises scale, breadth and diversity of offer are increasingly important. As a result, Stonegate made a cash offer of 203p for Revolution Bars Group on 24 August. The cash offer represented a 62.4% premium to the undisturbed Revolution share price on 28 July 2017 and was significantly ahead of research analysts’ target prices on that date. The cash offer was recommended by the board of Revolution and was supported at the time by Revolution’s largest shareholder. Since the announcement of the cash offer the environment remains tough and input costs continue to rise faster than consumer demand in the industry. Revolution’s current trading statement in its preliminary results announcement on 3 October reflected this, noting September trading, for the sector as a whole, has been disappointing. Unfortunately, commentators and research analysts have been distracted by an attempt by Deltic to force a hostile merger on terms that were attractive to Deltic’s shareholders, without Deltic offering any cash to Revolution shareholders. Stonegate has built its business by being a disciplined buyer of pubs and pub estates. Since creation, Stonegate has grown to more than 700 sites and is the UK’s leading drinks-led licensed retailer. Stonegate is not willing to depart from the acquisition discipline that has made it successful. As a result, Stonegate declares its cash offer of 203p final and it will not be increased, except Stonegate reserves the right to set this statement aside in the event of a firm offer announcement to acquire Revolution under rule 2.7 of the code by another party which includes the payment of cash to Revolution shareholders. Further, the board of Stonegate believes any further delay will prolong the uncertainty for employees of Revolution and is likely to have a detrimental impact on the business. Stonegate urges shareholders to vote in favour of the scheme to implement the final cash offer at the shareholder meetings on Tuesday (17 October), in person or by proxy. Revolution shareholders are reminded the deadline for proxies to be received by capita asset services is 10am on Sunday (15 October) for the court meeting and 10.15am on Sunday for the general meeting. Stonegate believes the final cash offer brings certainty to Revolution shareholders and all its employees, with payment to Revolution shareholders within four weeks. Stonegate hopes Revolution shareholders recognise the merits of the final cash offer and looks forward to welcoming the employees of Revolution to the Stonegate group.” Stonegate chairman Ian Payne added: “We have always been disciplined in the prices we pay for acquisitions. We believe 203p fully reflects the value of Revolution and the board of Revolution agrees with us. We urge shareholders to vote in favour of our final cash offer.”

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