MBO at Wolverhampton & Dudley?

There are reports that a management buyout backed by UBS Capital is on the cards.

Executives at Britain’s biggest regional brewer Wolverhampton & Dudley Breweries were said to be in advanced buyout talks yesterday with UBS Capital.

The management team comprising the group’s three executive directors, managing director David Thompson, finance director Ralph Findlay and managing director of its retail operations Derek Andrews are in talks to secure a buyout, Reuters reports. Wolverhampton & Dudley will not comment on reports.

The two sides are said to be in negotiations to secure a price which would value the company at approximately £470m (E740m).

The company which runs around 1,780 pubs as well as four breweries effectively put itself up for sale last October after leisure entrepreneur Robert Breare hovered over making a bid after Wolves share underperformance in recent years.

Wolverhampton and Dudley Breweries reported annual profits up 29.5 per cent in November last year amid speculation as to whether the brewer would receive a takeover bid or go for an MBO.

Leisure entrepreneur Robert Breare and venture capital firm Botts & Co, who jointly launched a 500p per share bid for Wolverhampton & Dudley in August, were said to have looked at other options in the UK breweries and pubs sector.

In August W&D, much to the dismay of shareholders, rejected Breare's initial £566m (E935m) bid approach on the grounds that it undervalued the company and was ‘too uncertain’.

Whilst Breare was expected to go hostile and come back with a higher offer, the brewer put together a defence strategy. In September, W&D announced plans to restructure and create three separate lines of business. However the following month the company suddenly turned round and made clear it was willing to talk to its stalker after all. Breare’s interest in the industry appeared to broaden to other opportunities, namely Whitbread’s 3000 pubs, the 900 outlets put up for sale by Bass, and Scottish and Newcastle’s 500 pubs. Breare was quoted as saying: “We are looking at a broad range of opportunities.”