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Fri 8th Apr 2016 - Eclectic Bar Group set to buy Brighton Pier, renamed as Brighton Pier Group
Eclectic Bar Group set to buy Brighton Pier, renamed as Brighton Pier Group: Eclectic Bar Group has entered into a conditional agreement to acquire The Brighton Marine Palace and Pier Company, which owns and operates Brighton Pier for a total cash consideration of £18 million on a cash-free, debt-free basis – the company will be re-named Brighton Pier Group. The company proposes to fund the consideration payable under the acquisition through a conditional placing of new Ordinary Shares to raise gross proceeds of not less than £8.5 million, with the balance to be funded through new £13 million debt financing agreed with Barclays Bank. In addition, Reuben Harley, the company’s chief executive, has informed the Board that he intends to step down from the Board following the completion of the Acquisition and intends to sell up to 1,853,795 existing Ordinary Shares pursuant to the Placing. The total consideration represents a multiple of approximately 5.1 times the Target Standalone Ebitda for the 12-month period ended 31 October 2015. The board believes that the acquisition represents a significant opportunity for the group to acquire an iconic British asset whilst also broadening its business base and diversifying its existing portfolio of venues by expanding into a differentiated offering within the leisure sector. In particular, the board believes that the Enlarged Group will benefit from the high-quality experience of operations, leadership and performance enhancement of PierCo’s existing, standalone, senior management team, led by Anne Martin, whom it is proposed will join the board on completion. Luke Johnson, the company’s executive chairman, is intending to subscribe for £2.5 million of New Ordinary Shares pursuant to the Placing. Johnson said: “We are very pleased to announce the acquisition of Brighton Pier, one of the most iconic and instantly recognisable attractions in the UK. The pier is hugely popular with the British public and it occupies a special place as a landmark at the heart of Brighton. Brighton is one of the UK’s most popular visitor destinations with over ten million visitors per year, making it the most visited place in the south east. The pier itself is Britain’s most popular attraction outside London. The pier has been well run and well maintained by the previous owners and we welcome Anne Martin and her first class management team to the newly enlarged Eclectic Group. This acquisition represents the next stage in the group’s development, expanding the company’s existing portfolio and using the enhanced board’s diverse skillset to become a differentiated operator of leisure and entertainment assets. I’d like to thank Reuben Harley for his contribution to the success of the group. He leaves with our warm wishes.”

Douglas Jack – recent weakness at Revolution Bars Group is an opportunity to buy: Numis Securities leisure analyst Douglas Jack has issued a buy note on Revolution Bars Group (RBG), forecasting 53% earnings growth in the next three years. He said: “We would treat recent share price weakness as an excellent buying opportunity. It was, in our view, wholly unconnected to the group’s operational performance. For the company with the highest returns and growth in the quoted licensed retail sector, its shares trade on a 2017E EV/Ebitda of just 4.4x and a FCF yield of 12.4%. Like-for-like sales rose by 2.7% over the first 34 weeks, aided by: improved food and drink menus; rising digital sales and pre-bookings (in H1: website traffic was up 18%; Facebook fan numbers were up 23% to over 500,000); and customer demand continuing to shift towards premium products. This market trend towards premium products is helping on-trade drink sales growth (+2.3% in 2015 versus +1.7% in 2014) to catch up with on-trade food sales growth (+2.7% in 2015 versus +5.5% in 2014), despite drink-led supply, by number of outlets, falling by 1.2% in 2015 (after -2.9% in 2014) versus food-led supply rising by 1.6% (after +5.4% in 2014). Here, our sources are ONS and CGA Peach. RBG is growing strongly, with little supply-side risk. It operates in a bar market that is benefiting from c.1% annual supply reduction (and the bar market has fewer outlets now than in 2006), amid increasing barriers to entry (including cumulative impact tests). In contrast to the bar market trend, the current RBG management team has never failed with a planning or licensing application. H1’s three new bars were trading 17% ahead of expectations, in revenue terms, at the time of the interim results (early March). Target returns are 33%, but expansion is orientated towards the Revolución de Cuba brand, which generated an average cash return of 54% up until 2015. The company should open five sites this year, and at least five next year, supported by a pipeline that has more than doubled to 15 sites over the last year. Following two upgrades over the last six months, we forecast 53% earnings growth over the next three years, cautiously based on slowing like-for-like gross profit growth assumptions. Over this period, RBG should build an increasing net cash position, unless the expansion rate accelerates, which we believe is probable, adding to the potential upside.”

Pod pegs prices despite National Living Wage increase: Healthy eating brand Pod has reported that it has not increased it prices despite the introduction of the National Living Wage. A spokesman said: “While many businesses in the food industry have opted to pass the National Living Wage rise increase implemented last week onto their customers in the form of small price increases, the innovative London based food-to-go restaurant chain pod – with 22 stores in the capital – has gone to great lengths to ensure the wage hike is not passed on to their large and loyal customer base maintaining its prices at their existing level. Pod worked up their plans for the costly Government initiative to ensure that all their close to 300 employees benefit from the National Living Wage increase by passing it onto everyone that works hard to produce their fresh, nutritious food from scratch each day, not just the mandatory band of workers aged 25+.”

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