Young’s acquires City Pub Group for £162m
The deal will allow Young’s to increase its pubs estate by 50 pubs as well as adding an additional 240 bedrooms to its portfolio
Young’s and Co has today (16 November) announced the acquisition of AIM- listed owner and operator of an estate of premium pubs and bedrooms, City Pub Company, for £162m.
The company has said to have closely followed the City Pubs estate for some time and that the transaction represents a “rare opportunity” to acquire a high-quality pub and bedroom portfolio of scale, and increase its managed trading estate by 50 pubs to 279 pubs.
The deal will also allow Young’s to substantially increase the number of premium bedrooms within the estate by adding 240 bedrooms – a 25% increase bringing the total to 1,065 bedrooms.
Despite the ongoing challenges faced by the pub sector, City Pubs reported a 12.4% increase in like-for-like sales during the first 38 weeks of the year. However, due to rising costs and the ongoing imposition of duty and business rates taxes, the company was not able to further expand the portfolio “as it would ideally have liked”.
Following the transaction, the City Pubs board believes that it offers “an attractive risk-adjusted outcome for City Pubs shareholders”.
The deal is expected to become effective in Q1 2024.
The news comes as Young’s revealed a 12% profit before tax increase to £28m for the 26 weeks ended on 2 October.
Commenting on the transaction, Simon Dodd, CEO of Young’s, said: “We are excited to be announcing the proposed acquisition of City Pubs, with the full recommendation of their board. Like us, City Pubs operates premium, individual and well-invested pubs and rooms, with a focus on the highest standards of customer service.
“We believe that City Pubs is an excellent fit with Young’s and the combination of the two businesses represents a compelling opportunity for all stakeholders. It will allow us to expand our estate through the addition of a complementary, high-quality pub and bedroom portfolio, with the potential for the benefit of significant operational synergies to be realised by both sets of shareholders, through the partial share offer.”
Clive Watson, executive chairman of City Pubs, added: “All at City Pubs can feel very proud of what has been built up over the past 12 years. City Pubs was an EIS start-up which began trading in March 2012 and now has an estate of fifty premium pubs in the great cities of Southern England and South Wales.
“The board believes the transaction significantly accelerates the value that could be realised in the short term by City Pubs if it were to remain independent. Additionally, the City Pubs Board is reassured by Young’s similar entrepreneurial culture and its approach to investing in the business.”
