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MBO on the cards at Yates as Laurel interest wanes

05 July 2004
MBO on the cards at Yates as Laurel interest wanes

Pub group Yates looks set for a £93m management buyout after rival chain Laurel decided not to bid and analysts believe fresh approaches are unlikely.

"We look at pretty much everything that comes on to the market and Yates was no exception," said a spokeswoman for Laurel. "We took a look at it and we decided not to make a bid."

Laurel's decision came as no surprise to analysts, who had earlier dismissed its recent approach as an attempt to gain information by accessing its rival's accounts. "It's a bit cheeky, but it's within the rules as you couldn't categorically say they wouldn't put in a bid," said one analyst. "And although another bid is possible, frankly it's unlikely."

Another industry commentator said: "The rumour out there is that Laurel views itself as a potential target so they took the opportunity to look at Yates's deal to gain information in relation to exit valuations. And I'd be surprised if there's anyone who would pay more [than the MBO offer]."

The £93m, 140p-a-share offer from bid vehicle Thorium, set up by the management team and private equity firm GI Partners, was recommended by Yates's independent directors last month. If a rival bid were to prove successful then Yates would have to pay GI Partners a £750,000 break fee.

Last month Yates reported that its pre-tax profits rose 6.5% to £10.6m in the year to 28 March, having slid from £15.6m in 2000 to £10m in 2003. However, analysts have expressed concerns over the group's ability to sustain its recent performance in a highly competitive market.

Yates responded to the news by announcing it was to drop the Wine Lodge part of its name after 120 years and will now be known simply as Yates's.

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