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Knockout profit at Punch boosts its bid desire

15 November 2005
Knockout profit at Punch boosts its bid desire

Bumper profits announced at Punch Taverns are set to embolden the pub chain to make a solo-bid for its rival pub group Spirit. It had planned to mount a bid for Spirit in partnership with listed rival Mitchells & Butler but this plan has since foundered.

Last week it said that pre-tax profits were up 28% to £207m. The healthy results made most commentators believe it will now enter the race for Spirit alone.

The numbers were boosted in part thanks to past previous acquisitions, notably Innspired and Avebury Taverns. And this success at integration will only whet the appetite for a bid.

Offers for the 1,832 pubs in the Spirit estate have to be in by early next week. Owners Texas Pacific, Blackstone and Merrill Lynch are anticipating bids in
excess of £3bn.

Were Punch to win the race it would have to seek approval from its own shareholders. Chief executive Giles Thorley's comments last week playing up the contribution of past acquisitions are aimed squarely at this audience.

Rivals to acquire Spirit include Clearbrook Capital, the vehicle headed by former West LB investment banker Robin Saunders; Australian bank Macquarie; and
property magnate Robert Tchenguiz. None of these rivals are likely to offer the same level of potential synergies as Punch, however.

The preferred option for Punch is still thought to be the acquisition of just part of Spirit. The hunt for a partner is therefore likely to continue with Wolverhampton & Dudley tipped as a possibility.

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