London and New York based private equity firm MidOcean Partners has sold 432 so-called neighbourhood pubs that make up most of the Laurel chain to Suffolk-based brewer and pub operator Greene King for £654 million (€976 million; $1.2 billion).
MidOcean, which spun itself out of parent company Deutsche Bank for €1.5 billion in 2003, manages the Morgan Grenfell private equity portfolio for Deutsche Bank of which the Laurel pub chain was part.
Greene King beat off initial interest from reportedly 25 to 30 trade and financial buyers when the auction process was started in February. Laurel will retain around 200 city centre venues, including the Hogshead chain.
Sources indicated that the Laurel deal had returned 2.5x money to investors including a recapitalisation worth £295 million last year.
The UK pub chain business has continued to provide some lucrative opportunities for private equity investors in recent times.
In March, a Cinven-led consortium sold its stake in the Unique Pub Company for £609 million. At the end of last year, US private equity house Texas Pacific Group sold its interest in UK-listed Punch Taverns, 54 million shares, for an undisclosed sum.
Texas Pacific still holds the stake it acquired as part of the Spirit Amber consortium in Scottish & Newcastle’s managed pubs business. The consortium, comprising Blackstone Group, CVC Capital Partners and Merrill Lynch Global Private Equity, acquired the business for £2.5 billion last year.
In April this year, MidOcean announced plans to collaborate with New York-headquartered Ripplewood Holdings on deals and to create a global private equity entity operating in North America, Europe and Asia.