One of the curses of this job is that important stories break just as we are about to or have just gone to print. This is probably one of the biggest developments in the pub trade in years.
Relative newcomers the Stonegate Pub Company are in advanced negotiations to buy out the Ei Group, formerly Enterprise, for a reported £1.27 billion. The deal will however need to be approved by Ei Group’s shareholders and I’m sure that the various competition authorities will want to scrutinise it because it will make Stonegate the country’s largest pub owning business (POB), replacing EI themselves.
Stonegate, formed in 2010 by private equity firm TDR Capital with 265 pubs purchased from Mitchells & Butlers, operate various brands including Be At One and Slug & Lettuce and currently have 760 pubs and bars.
CAMRA national director Ben Wilkinson, said, “For many Ei Group has become a byword for unfair business practices and disregard for the social value of pubs. Its custodianship of thousands of community pubs has not been a happy period and it’s clear many will welcome this news. However, such a significant change will create anxiety and we call on Stonegate to be clear and open about their plans as early as possible. This deal will make Stonegate the largest pub owner in the UK, and that brings a huge responsibility both to consumers and to their tenants. We hope Stonegate seizes this opportunity to make a firm commitment to adhere to the spirit and letter of the Pubs Code and spearhead a new, more positive era in the industry by setting a gold standard for thriving pubs based on fair and equitable business practices.”
Ei Group’s financial performance had improved recently. In the year ended 31 March an increase in sales of 6% led to profits to £59 million, up by £2 million on the year. Their managed house operation, Publican Partnerships, saw sales increase by 1.9%. The group was looking to increase the number of managed houses to 400 this year and then to 500 in 2020. They were also looking to buy back come £30 million of shares. According to the Morning Advertiser, over the last five years Ei Group have sold off 930 ‘underperforming’ (by their definition) pubs and have converted 419 tenancies to managed houses.
There are enormous implications to this event that will, no doubt, be revealed in the days to come. Not all of them may be good for those who run or use our pubs. Watch this space.
Tony Hedger