Young’s acquires City Pub Co for £162 million
16 November 2023
Young’s has acquired City Pub Company’s 54 sites in a deal worth £162 million.
The deal, which brings Young’s pub estate up to 279, will see all City Pub Company pubs across southern England and Wales absorbed into Young’s portfolio.
Commenting on this announcement, Simon Dodd the CEO of Young's said: "We are excited to be announcing the proposed acquisition of City Pubs, with the full recommendation of their Board. City Pubs is an excellent business we have followed for some time, and one which aligns closely with Young's in terms of both strategy and culture. Like us, City Pubs operates premium, individual and well-invested pubs and rooms, with a focus on the highest standards of customer service. Both businesses have performed well in a tough trading environment recently, testament to the strength of our business models, people and approach to customers.
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."
Commenting on the Transaction, Clive Watson the Executive Chairman of City Pubs said: "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. Like all hospitality businesses, the pandemic derailed City Pubs' progress, but it has been able to produce a strong performance since with a more focussed, reshaped business with the lowest debt in its history and a solid strategy in place.
The City Pubs Board has therefore been able to evaluate today's recommendation from a position of strength. Mindful of the uncertain economic climate, high interest rates and inflation in particular, and our plans for long term growth as an independent company, initial approaches were rejected. However, following careful consideration, we believe the Transaction is in the best interests of City Pubs shareholders with the ability to realise 75 per cent. of the equity in cash at a material premium to the current share price together with a stake in the future upside. 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.
