MGPE exits leased pubs division

MGPE has completed a second exit from its Laurel Pubs business, selling 1800 leased pubs to Enterprise Inns for £875m.

UK private equity firm Morgan Grenfell Private Equity (MGPE) has disposed of Pub Partnerships, the leased pubs division of Laurel Pub Holdings business for a total price of £875m to Enterprise Inns. Pub Partnerships comprises 1860 leased pubs and generated operating profit, before central overheads, of £95.1m on turnover of £206.8m for the year to March 2001.

Laurel Pub Company was created from the former Pubs and Bar Company of Whitbread plc, and was acquired by MGPE in March 2001 for £1.625bn. This latest deal represents the second transaction between Enterprise and MGPE. In May 2001, MGPE sold 439 managed pubs from its Laurel Pub chain to Enterprise for just over £262m. Laurel Pub Company will now concentrate on developing the remainder of its managed pubs operation. With 606 pubs they currently rank as the fourth largest managed house operator in the business.

Earlier this year, Enterprise invested £75m for a 16.8 per cent stake in Newco, a company formed alongside Cinven and Legal & General Ventures to purchase both the Unique and Voyager pub estates (totalling 4,189 pubs) from Nomura International plc for just over £2bn, including debt. Enterprise was granted a call option by the equity consortium to purchase the balance of the equity in Newco. The option is exercisable in 2004, although Enterprise expects any purchase to be subject to regulatory approval.

In late 2001, Morgan Grenfell Private Equity was folded into Deutsche Bank’s larger private equity business DB Capital Partners. Deutsche Bank has acted for Enterprise Inns for this latest transaction. MGPE was advised by Lehman Brothers.