SFI to buy Slug & Lettuce

The SFI group is buying rival pub chain Slug & Lettuce for about £31.6m.

The boards of the two firms have reached agreement on a recommended offer to be put to shareholders. They will get 106 new SFI shares for every 100 Slug & Lettuce shares.

SFI said the acquisition would provide the company with a third branded chain to complement its existing Bar Med and Litten Tree formats.

David Williams, chairman of Slug & Lettuce, commented: "The board of Slug & Lettuce concluded that this was a market where size does indeed matter.

As a consequence we have explored a merger with a number of partners and decided that combination with SFI will provide for the continued development of the brand as part of a large, well-resourced pub retailing group."

Slug & Lettuce has 34 pubs, 17 of them inside the M25. In the year ended 31 May, the group made pre-tax profit of £2.2m on sales of £29.3m. Like-for-like sales were up by 4%.

SFI said the Slug & Lettuce chain offered "a female-friendly, congenial atmosphere and is targeted at an ABC1 demographic profile." This made it an ideal complement to SFI's two other brands.

SFI has 67 branded and 17 non-branded pubs. A limited number of Bar Meds and Litten Trees could be converted to the Slug & Lettuce format, and vice versa, it said.

Over the next 12 to 18 months, SFI said it would look at spinning off or selling some of its unbranded pubs and its For Your Eyes Only table-dancing clubs.

by David Shrimpton david.shrimpton@rbi.co.uk