Punch to keep buying despite pulled float

Punch Taverns will press on with its drive to acquire more pubs despite the abandonment of its stock market flotation last night.

The company had hoped to raise £250m by selling 40% of the business.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>

About £154m would have gone to existing shareholders, £15m to pay off a portion of the group's £1.4b debt, £56m to extend Punch's 4,252-strong chain and the remainder in fees and expenses.

The firm admitted that a lack of demand from investors for the shares and the disappointing market debut of record-shop chain HMV and the resulting negative sentiment around new issues had forced a rethink.

A spokeswoman for the firm said that its bank, Merrill Lynch, had found enough buyers to cover the flotation, but not enough to push the share price beyond the bottom end of the 250p to 300p value set by the firm. And Punch feared the "HMV factor" might cause the price to fall further.

The spokeswoman said the firm would now focus its attention on "developing acquisitions". Punch was not, unlike many companies entering the stock market, "compelled" to raise cash, she said.

Last Friday, Punch bought the White Rose company for £15m, adding 46 Yorkshire pubs to the chain.