Young's has completed its acquisition of London-based pub firm Geronimo for £60m in cash, in a deal that will see Geronimo co-founder Rupert Clevely join the Young's board.
Geronimo has 22 pubs in London, three at Heathrow Airport and one in Surrey. Ten of the pubs are freeholds, 13 are leaseholds and there are three concessions.
Its estate will now be run "discretely" within the Young's managed estate, bringing it to 148 pubs, and taking the company's total estate to 247 pubs.
Young's said in a statement to the City this morning that in addition to its existing estate, Geronimo would bring expertise in operating both leases and concessions at high-footfall locations, with pubs at Heathrow Airport, St Pancras International Train Station and the Westfield London Shopping Centre in Shepherd's Bush.
"While maintaining a high freehold mix remains important to the overall Young's strategy, the addition of this particular expertise enables Young's to increase its rate of new site openings with attractive returns on capital," the company said.
Geronimo's pre-overhead earnings before interest, tax, depreciation and amortisation (EBITDA) was £6.1m in the year to June 2010, while it is expected to deliver pre-overhead EBITDA of £8.2m for the year to June 2011. Geronimo has overheads of around £3m and Young's expects to make cost savings of £1.5m through the combination of the two complementary businesses.
Commenting on the transaction, Stephen Goodyear, chief executive of Young's, said: "The acquisition of Geronimo, a business we have known for a number of years, represents an excellent opportunity to accelerate the growth of the Young's managed estate.
"The acquisition fits very well with our expansion strategy, which is focused on high-quality, food-led, managed houses in the London area, a strategy that we will continue to pursue with both the Young's and the Geronimo formats. Geronimo's team also brings considerable expertise in the operation of leases and concessions in high-footfall retail locations such as airports and shopping centres and this represents a new growth opportunity for us.
"I am particularly delighted that Rupert Clevely has agreed to join our board and that his senior management team will be staying. We look forward to combining the best of the expertise from both teams to drive the enlarged group forward."
Clevely, chief executive of Geronimo, added: "Young's is the perfect home for Geronimo and I am delighted that the Young's board wants to continue to embrace and retain Geronimo's inimitable DNA. Key to our success is the entrepreneurial flair and individuality, proven food expertise and home-from-home hospitality for which Geronimo is renowned and which our customers will continue to enjoy.
"The continued involvement of my trusted team will ensure that Geronimo's unique spirit will be maintained and that the Geronimo footprint will develop alongside and as a complement to Young's as the combined business looks to expand both formats."
By Neil Gerrard
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