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Thu 30th Nov 2017 - Deltic Group buys 3% stake in Revolution |
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Deltic Group buys 3% stake in Revolution: The Deltic Group has bought a 3% stake in Revolution Bars Group. Deltic has purchased 1,500,000 shares in Revolution. The share deal comes some six weeks after Deltic said it was still willing to talk about a proposed merger with Revolution, whose shareholders rejected a £101.5m takeover bid by Stonegate Pub Company. The failure of Revolution Bars Group to engage with Deltic, combined with Takeover Panel rules, forced Deltic to withdraw its merger proposal in October. However Deltic has stated that restrictions on it bidding for Revolution Bars Group do not apply if the board of directors of Revolution Bars Group agrees to engage. Revolution Bars Group's largest shareholder has also previously said it might be willing to back a merger with Deltic. Will Tamworth, a portfolio manager at Artemis, which owns about 15% of Revolution’s shares, said: “We think there could be a logic in combining with Deltic – but it needs to be on the right terms and does not need to be straight away.” Earlier this week, Peel Hunt leisure analyst Douglas Jack argued there was a downside risk to Revolution shareholders in delaying merger talks with Deltic. He said: “Deltic’s recent like-for-like sales were up 9.1% in a market that has benefited from 40% supply reduction since 2006. The performance gap could soon shift merger terms in Deltic’s favour. Revolution Bars Group is currently valued at 4.8 times EV/Ebitda, below the 5.9 times that Deltic (as Luminar) was last valued at by the market in 2007-10, in the middle of licence reform, the smoking ban and the financial crisis. This implies that, with 40% less supply, Deltic would now enhance, not dilute, Revolution Bars Group's market rating.”
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