Enterprise Inns, one of the UK’s largest pub chains, has announced that it plans to acquire the remaining stake in fellow pub operator Unique Pub Company that it does not own.
Enterprise Inns made a £75 million (€108 million; $137 million) cash investment in the initial £2.013 billion acquisition of the Unique Pub Company by a private equity consortium led by Cinven and including Morgan Stanley’s Princes Gate Investors and Legal & General Ventures in March 2002. Cinven contributed £235m of equity with LGV and Princes Gate investing £60m and £77m respectively.
Enterprise Inns indicated in its AGM statement today that it intends to exercise its call option to acquire the 83.2 percent equity stake in the Unique Pub Company currently held by a private equity consortium led by Cinven, before the end of March 2004. The consideration for the exercise of the call option is expected to be approximately £609 million.
Enterprise Inns said it would fund the transaction through debt.
The combined Unique and Voyager estate was the subject of an additional securitisation programme which raised £855 million. Following this securitisation, capital was returned to the Cinven Consortium and the terms of the call option altered to reflect this return of capital.
“This has been a highly successful investment for Cinven which will result in a return of over two times our invested capital,” said Dick Munton, a director of Cinven. “When we made this investment, we knew that we were backing a management team with the ambition and experience to create significant value. The performance of the business has been excellent and is reflected in Enterprise Inn’s announced intention to exercise its call option.”
Cinven first invested in the UK pub sector in 1994 acquiring Magic Pubs, a managed estate, for €160 million. The business was later sold to Greene King in July 1996 for €310 million.