M&B to sell off over 300 ‘non-core’ pubs

BIRMINGHAM-based pubco Mitchells and Butlers is proposing to dispose of 333 of its ‘non-core’ pubs for a cash consideration of £373m.

The deal will be struck with Stonegate Pub Company Limited, a company controlled by private equity firm TDR Capital LLP which is based in London.

This disposal, which includes the Scream chain of bars popular around universities, is in line with M&Bs’ strategy announced in March to withdraw from the drinks-led pubs it currently operates.

Completion is due to take place mid-November and it is expected that £500m will have been realised from recent non-core disposals including the Hollywood Bowl earlier this month and and Innkeeper’s Lodge chain in July.

The pubs had attributable EBITDA and an operating profit in the 52 weeks ended April 10 this year of £52m and £35m respectively.

This represented an EBITDA multiple of 7.2x on the gross proceeds, M&B said in a statement.

• Latest Mitchells and Butlers share price and historic data – click here

A fifth of the pubs are short leasehold, generating £8m of EBITDA and £2m of operating profit in the same 52-week period.

M&B said that, in the next phase of its strategy, the board intended to reinvest the proceeds into growth opportunities offered in the informal eating out market where its brands could deliver attractive growth prospects.

Following this disposal, M&B will have 1,580 restaurants and food-led pubs with higher growth potential.

Including the gross proceeds from all the non-core disposals, net debt at April 10 this year would have been £2,013m, comprising £2,303m of securitised long term debt and £290m of cash.

M&B chairman John Lovering said: “I am delighted with the progress being made on reshaping M&Bs’ portfolio in line with the strategy we announced in March.

“Adam Fowle and the new management team are making excellent progress in accelerating the pace of change throughout the organisation.”

M&Bs’ portfolio includes Harvester, Toby Carvery, Vintage Inns and Premium Country Dining Group.