The board of directors of Stonegate Pub Company have reached an agreement with Ei Group to purchase the entire share capital of the group in an all-cash acquisition.
The acquisition is expected to come into effect in the first quarter of 2020, subject to satisfaction of conditions.
Under the terms of the acquisition, each Ei Group shareholder will be entitled to receive 285p in cash for each share.
This values the Ei Group’s entire issued, and to be issued, ordinary share capital at approximately £1.27bn, implying an enterprise value of £2.97bn and a multiple of approximately 11.4 times the group’s underlying EBITDA of £261m for the financial year ended 30 September 2018.
Ei Group owns over 4,000 properties across England and Wales, within publican partnerships, managed pubs and commercial properties.
Stonegate manages 765 outlets nationally. In 2018, the managed pub company invested £71m into its estate.
The company has expressed an interest in continuing Ei Group’s existing strategy.
“It is an exciting prospect to bring Ei Group and Stonegate together to create a diversified pubs group with significant industry expertise,” says Stonegate chairman Ian Payne (pictured). “At Stonegate, we have an established track record of running successful pubs throughout the UK – with over £350m having been spent on capital expenditure at Stonegate since it began trading in November 2010. We plan to leverage our existing managed house infrastructure, portfolio of formats and access to capital and invest in the combined estate for the benefit of all stakeholders. We look forward to working with Ei Group and its publicans to support future growth and create stronger pubs at the heart of communities across the UK.”
Robert Walker, chairman of Ei Group, adds: “In 2015 we set out a new strategy. During the past four years we have made great progress in its execution and have delivered a significant increase in value for our shareholders. The management team have done an outstanding job and the acquisition, at a significant premium, is only possible because of the work that they have done and what has been achieved. The acquisition delivers the future value of the strategy for our shareholders and secures an exciting future for our tenants and employees by creating the leading managed and tenanted pub company in the industry. The commercial benefits of combining the companies are compelling. Stonegate is committed to continuing to invest in the business for the future benefit of the combined business, tenants and employees. The Ei Group board believes that this is a combination it can recommend with confidence to shareholders and stakeholders alike.”