The UK-based Young & Co.’s Brewery PLC (GB:YNGN) agreed to buy its rival firm City Pub Group PLC (GB:CPC) in a move to expand its portfolio as the pub industry faces multiple headwinds. The deal, which is valued at £162 million, will boost Young’s estate by 50 pubs, bringing the total to 279 pubs. Additionally, Young’s will incorporate 240 bedrooms into its estate, increasing the overall count to 1,065 bedrooms.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
As per the offer conditions, shareholders of City Pub will receive 108.75p in cash and 0.032658 new Young’s A shares for each share they hold in City Pub. Post-completion of the deal, City Pub shareholders will constitute approximately 6% of Young’s economic entitlement and 10% in terms of voting rights.
The City Pub share price soared around 37% after the announcement, taking the year-to-date gain to over 85% in trading. On the other hand, Young’s share price went down by around 3% yesterday.
The Synergy
This acquisition comes at the right time for both companies, considering the challenges within the industry, including higher input costs and interest rates. The deal is anticipated to be completed in the first quarter of 2024.
Young & Co. operates a chain of hotels and pubs in local communities across England. The company has a rich history of nearly 200 years, making it one of the oldest pub companies in the UK. The deal will solidify its position as one of the leading premium pub operators in the area. The company is confident that City Pub will align seamlessly with its portfolio, and the acquisition will present an attractive opportunity for all involved parties.
The board of City Pub Group collectively supported the offer and highlighted the premium associated with the deal, considering the existing risks for small businesses exposed to macroeconomic uncertainties.
