Propel Info Morning Briefing: 24th Aug 2017 - Stonegate to buy Revolution Bars Group for £101.5m

Stonegate to buy Revolution Bars Group for £101.5m: Stonegate Pub Company has reached agreement with Revolution Bars Group to buy the company for £101.5m. Under the terms of the offer, Revolution shareholders shall be entitled to receive 203p per share in cash, representing a premium of approximately 62.40% to the closing price per Revolution share of 125 pence on 28 July 2017, which was the last business day prior to the commencement of the offer period. Revolution Bars Group stated: “The Revolution directors, who have been so advised by Numis as to the financial terms of the offer, consider the terms of the offer to be fair and reasonable. In providing advice to Revolution directors, Numis has taken into account the commercial assessments of the Revolution directors. In addition, the Revolution directors consider the terms of the offer to be in the best interests of Revolution shareholders as a whole. Accordingly, the Revolution directors intend to recommend unanimously that Revolution shareholders vote in favour of the scheme at the court meeting and the resolutions to be proposed at the general meeting as the Revolution directors have irrevocably undertaken to do in respect of their own beneficial holdings of 998,523 Revolution shares representing, in aggregate, approximately 2.% of the ordinary share capital of Revolution in issue on 23 August 2017. Stonegate has received support for the Offer from Revolution shareholders holding a total of 10,470,644 revolution shares representing, in aggregate, approximately 20.94% of Revolution’s ordinary share capital in issue on 23 August 2017. This support comprises an irrevocable undertaking to vote in favour of the scheme at the court meeting and the resolutions to be proposed at the general meeting from Castlefield Fund Partners in respect of a total of 2,085,000 Revolution shares representing, in aggregate, approximately 4.17% of Revolution’s issued ordinary share capital; a letter of intent from Artemis Investment Management LLP to vote in favour of the scheme at the court meeting and the resolutions to be proposed at the general meeting in respect of 7,387,121 Revolution shares, representing, in aggregate approximately 14.77% of Revolution’s issued ordinary share capital; and the irrevocable undertakings provided by the Revolution directors described above. The offer shall be put to Revolution shareholders at the court meeting and at the general meeting. In order to become effective, the scheme must be approved by a majority in number of the Revolution shareholders voting at the court meeting, either in person or by proxy, representing at least 75% in value of the Revolution shares voted. In addition, resolutions required to implement the scheme must be passed by the relevant requisite majority of Revolution shareholders at the general meeting. The scheme must also be sanctioned by the court.” Revolution Bars Group non-executive chairman Keith Edelman said: “We believe the offer from Stonegate represents an attractive and certain value in cash today for Revolution shareholders, reflecting the high quality of the business, its people, market position and future prospects. The Stonegate proposal provides considerable opportunities for our people and for the business as a whole. Stonegate is an experienced operator in this sector that understands Revolution’s ethos with its unique premium bar offering.” Stonegate chairman Ian Payne added: “We are delighted to announce this agreement with Revolution, which is a business we know well and whose leading position in the premium segment of the drinking out market is a highly complementary addition to our existing offering. Our strong reputation and position in the market firmly establishes Stonegate as the natural home for Revolution’s brands, and will allow us to enhance further the breadth of offer and occasions we cater for. This acquisition is entirely consistent with our stated strategy to capitalise on the town and city centre drink-led opportunity. Stonegate has a successful track record of investing in and growing the businesses, which it has acquired. Revolution is a high-quality business with good people and an attractive consumer proposition. We look forward to working together with our new colleagues joining the enlarged Stonegate group to continue to provide a great experience for customers.” Revolution Bars Group currently trades from 68 sites, 54 under the Revolution format and 14 under the Revolución de Cuba format. Stonegate operates more than 690 pubs split into two divisions – Branded (Slug and Lettuce, Yates’s, Walkabout, Common Room and Venues) and Traditional (Proper Pubs, Town Pub & Kitchen, and Classic Inns). It acquired Intertain from private equity firm Better Capital for about £39.5m in December last year.