UK Pubs Group Punch Taverns wants to eliminate its main rival for Whitbread’s 3,000-strong pubs estate, The Financial Times reports.
Last week the group’s chief executive Hugh Osborne prevented Luke Johnson, his co-founder of Pizza Express, from bidding for the group. Johnson signed a non-compete clause with Osborne.
Johnson had secured the backing of Morgan Grenfell Private Equity and financing from Lehman Brothers to mount his own bid for the pubs. The private equity house and the investment bank decided to pursue the bid even after Johnson had to withdraw on account of the non-compete agreement with Osborne. And earlier this week MPGE won preferred bidder status from vendor Whitbread.
But it has now emerged that Punch Taverns also signed a non-compete clause with Deutsche Bank’s DB Capital two years ago as a shareholder in Punch. Deutsche Bank owns MGPE. It is understood that Punch will seek to invoke the clause. Hugh Osborne confirmed to The Financial Times that a letter had been sent to MGPE but said: “”The nature of the contents of the covenants was confidential.”
MGPE is believed to have bid £1.65bn for Whitbread's pubs whilst Punch is understood to have bid £1.6bn. Private equity firm Candover is thought to have bid £1.55bn.