Fuller's has piled more pressure on Capital Pub Company to reconsider its £54m offer for the business, after it pored over Capital's full year financial results, published yesterday.
Last week Fuller's revealed it had made two offers for Capital, the latest at 200p a share, valuing Capital at £53.9m. But Capital rebuffed both offers and has declined to enter into discussions with its larger rival.
This morning in an apparent appeal to Capital's shareholders, Fuller's pointed out that Capital's reported adjusted earnings before interest, depreciation and amortisation (EBITDA) for the year to 26 March 2011 of £6.8m, were £300,000 lower than analyst Panmure Gordon's recent forecast of £7.1m.
It also questioned Capital's growth strategy, indicating it had taken 10 years for Capital to grow its estate to 34 pubs. Fuller's also warned that the strategy to grow the estate by a further 11 to 16 pubs over the next two years had "considerable risks associated with its execution which could dilute the overall quality and attractiveness of the estate".
Fuller's also pointed out that its possible offer valued Capital at 9.3x EBITDA based on Capital's full year figures for 2011. That compared favourably with the multiple paid by Greene King for Realpubs, it said. In that case, freehold assets comprised 93% of the Real Pubs estate and Greene King paid 8.4x next year's house EBITDA (according to a Greene King acquisition announcement on 27 April 2011).
The directors of Capital hold only 13% of the issued share capital of the business, and despite the management's rejection of Fuller's offer, a deal could still be done if Capital's other shareholders bring pressure to bear on the board to reconsider.
Fuller's said its offer would offer shareholders "the certainty of a cash exit in the near term" and that the the possible offer of 200p per share was a "very attractive price for Capital's shareholders, being a 53% premium to the share price immediately prior to Fuller's initial approach".
By Neil Gerrard
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