Capital Pub Co boss stands by rejection of Fuller's bid
Capital Pub Company boss Clive (pictured) Watson has struck a defiant tone over his firm's rejection of a £54m takeover bid from Fuller's, as Capital unveiled a 48% increase in pre-tax profits in 2010/11.
Last week Fuller's revealed that it had made a possible all-cash offer of 175p per share for Capital on 22 March but was rebuffed. It then made an increased offer of 200p per share, valuing Capital at £53.9m, on 26 April. However, Capital, which has 34 pubs and hopes to grow to 45-50, rejected the offer again and declined to enter discussions over a deal.
In a statement, Fuller's said it was "disappointed" by its smaller rival's reaction and warned that the company's growth strategy would need further injections of capital.
But speaking to Caterer, Watson said: "The offer from Fuller's seriously undervalued the pubs that we have got and seriously undervalued our prospects. I want to go on building Capital Pub Company as London's only remaining independent freehouse operator. I think London deserves an independent operator and I think it needs one.
"When we get to 45-50 pubs I believe we will be a major player on the London market and much more in control of our destiny."
However, the directors and senior management of the business hold only 13.1% of the company's share capital. Despite Watson's comments, it remained unclear how other shareholders in the business, who saw the firm's share price fall as low as 30p in 2009, would react to Fuller's offer. City analyst Mark Brumby of Langton Capital suggested that the shareholders could bring pressure on the board to accept a deal.
Watson indicated that the company would make a presentation to shareholders over the next week and half. "I am very confident that they will be very supportive, as they have in the past of our strategy," he said.
This week, Capital revealed that pre-tax profits had climbed to £4.1m for the year to 26 March 2011. Revenue was up by 24% to £27.1m, while the firm's net debt dropped £7.1m, leaving gearing at around 50%.
Watson credited the strong performance to an improving London economy, as well as positive trading at its seven new sites, four of which have been refurbished.
"Consumer confidence is moving forward and I think that is why London pub companies are in vogue," he said. "The London economy, because of all its dimensions in terms of tourists and office workers and the City bouncing back, is a very good place to be trading pubs. Public sector cuts don't seem to affect us so much."
The company sold one pub - the Marquis of Granby on Shaftesbury Avenue for £3.5m in May 2010. It will surrender the lease of the Hog in the Pound in W1 in July and as a result will receive in excess of £1m in compensation.
CAPITAL ACQUISITIONS
Capital has this month exchanged contracts on the Priory, a free-of-tie leasehold pub in Clerkenwell, for £160,000.
Watson said the firm planned three to four more purchases in the coming 12 months. He will take the lead on finding sites, following the March appointment of operations director Alex Derrick.
Capital made seven acquisitions in the year to 26 March 2011. Four were refurbished, including:
â- The Actress in East Dulwich (lease with an option to acquire the freehold).
â- New Cross House in New Cross (lease acquired with an option to acquire the freehold).
â- The Mansion in West Dulwich (freehold).
The three bolt-on acquisitions were:
â- The Black Swan in Cobham, Surrey (freehold). Sales are currently in excess of 15% ahead of last year.
â- The Morgan Arms in Bow (freehold). Sales are currently in excess of 10% ahead of last year.
â- The Rye in Peckham Rye (freehold).
