Punch Pubs shareholders prepare to toast £1bn Fortress bid

The owners of Punch Pubs & Co, one of Britain’s biggest pub operators, are exploring a sale of the company after receiving a string of approaches despite ongoing pandemic-related uncertainty.

Sky News has learnt that Fortress Investment Group, the US-based investor owned by Japan’s SoftBank, is in talks to buy Punch for a price believed to be in the region of £1bn.

City sources said on Monday that the talks were “serious” but said they were far from certain to result in a deal.

Other parties are also said to have approached Punch, which is controlled by Patron Capital Partners, and it was unclear whether Fortress had formal exclusivity in its negotiations.

If completed, a takeover of Punch, which owns about 1300 pubs across Britain, would be among the sector’s largest since the start of the pandemic.

Punch ranks below the likes of Stonegate, which owns the Slug & Lettuce and Walkabout chains, and Greene King by number of sites.

It remains, however, one of the industry’s biggest players.

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In 2017, Patron and May Capital acquired control of the whole of what was then called Punch Taverns and its 3200-strong estate.

The majority of its pubs – approximately 1900 – were then sold to Heineken, leaving the remainder under the ownership of the new shareholders.

Punch had previously been through a long period of financial restructuring on the public markets.

Earlier this year, the company secured a £600m bond refinancing deal, and followed that by announcing the acquisition of Young’s tenanted pub estate, comprising roughly 50 sites, for about £50m.

In the prospectus for the bond issue – prior to the Young’s deal – Punch’s real estate portfolio was valued at £850m, implying that the company could be valued at about £900m.

One analyst said its overall enterprise value, which includes its borrowings, could be in the region of £1.5bn.

Punch is run by Clive Chesser, its chief executive and a former boss of rival Greene King.

The company is a major private sector employer, with around 20,000 staff.

Last month, Mr Chesser told an event convened by Sky News that the pandemic was “not yet in the rear-view mirror” and that continued government support was vital.

“We need to continue to get the support from government through the COVID pandemic beyond the current measures that are in place and longer term and to have a real transition plan,” he said.

“Fundamentally we’re back up and running, we’re out of hospital, we’re healthy, we’re open, but we’ve still got some symptoms that are very real and we need the support from government, for our sector, in particular.”

The emergence of the Omicron COVID-19 variant, which is about to trigger a renewed set of public health measures, has dampened hopes of a return to normality in the hospitality sector during the crucial Christmas trading period.

Nevertheless, Punch is said to have been trading reasonably well in recent months.

Fortress, Punch, Patron Capital and May Capital all declined to comment.

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