Mon, 16 Jun 2014 | MERGER
Public house operator Mitchells & Butlers has put £266 million on the table to purchase its rival’s estate.
Orchid Group has sold 173 pubs – most of its portfolio – and its head office to Mitchells & Butlers. About 96 of the newly acquired sites, which are mostly freehold or long leasehold, are to be revamped under the M&B brands over the next two years, at an expected cost of £35 million.
M&B already has more than 1,500 pubs, which it operates under the Harvester, Toby Carvery and All Bar One brands, amongst others.
Orchid’s outlets are located throughout Britain, with most being clustered in the South East and North West of England. The acquisition will result in cost savings and synergies through its support functions and purchasing.
The deal is set to beef up M&B’s portion of the branded pubs and restaurants market, in its bid to edge away from wet-led pubs.
Chief executive Alistair Darby said: “We greatly look forward to welcoming the Orchid employees who will transfer to Mitchells & Butlers at a consequence of this acquisition.”
M&B enjoyed a strong first quarter, with its sales rising by 2.5 per cent to £1.02 billion for the six months to 12 April 2014.
The price of £266 million was settled in cash, and may involve an adjustment of up to £2 million according to the levels of working capital and cash in the business on completion.
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