Private equity owner bags pub group in £3bn takeover

BrITAIn’S largest pub owner will fall into private equity hands in a £3bn deal.

EI Group, which owns 4,000 pubs across the UK, is being bought by Slug & Lettuce owner Stonegate and will leave the stock market.

Stonegate, which also owns chains Yates and Walkabout, is based in the Cayman Islands and owned by private equity house TDr Capital.

The firm was founded in 2010 after it acquired 333 pubs from Mitchells & Butler for £373m.

The deal gives EI Group a price tag of just under £3bn, including its £2bn debt pile, and will trigger a pay-out for investors of 285p per share.

EI directors are backing the offer after two months of secret talks. They turned down an initial bid of 270p per share, and then rejected a further offer before finally settling on the current bid.

The deal is expected to deliver a bumper payday for EI chief executive Simon Townsend, who can make up to £3.8m. Townsend holds more than 1.3m shares in the group, some of which are subject to certain performance targets.

If he is judged to have met these targets when the deal completes, he will be handed the multi-million pound award.

Stonegate boss Simon Longbottom is set to run the overall group following the takeover, which must still be supported by EI shareholders in a vote in coming months.

Since 2015, EI has increasingly been running its pubs directly through managers rather than renting them out to tenants. This transformation programme will continue after the deal.

Stonegate will take on EI’s 1,800 staff, adding to its existing headcount of 15,000.

However, Stonegate admitted it was likely to slash duplicate roles, meaning some job losses are expected.

robert Walker, chairman of EI, said: ‘The commercial benefits of combining the companies are compelling.’