The Scotsman

CASH VERSUS EQUITY

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Britain’s biggest nightclub operator turned up the volume yesterday in its efforts to win the hand of smaller rival Revolution Bars by publishing the terms of an all-share takeover proposal and saying it wanted to take them directly to the target’s shareholde­rs.

Deltic, whose initial approach in the summer was rebuffed, said a merger would see Revolution’s shareholde­rs own a majority 65 per cent of the combined business and Deltic’s investors 35 per cent of a business that would have annual sales topping £270 million. It also said the takeover would result in £6.8m of cost synergies and £900,000 of financing synergies.

Yesterday’s proposed tieup sees Deltic take on pubs group Stonegate, which struck an agreement in August to acquire Revolution Bars in a £101.m, 203p a share, cash deal. Shares in Revolution Bars closed down 3.5p at 207p yesterday.

Revolution, which owns more than 60 Revolution and Revolucion de Cuba high street bars, including outlets

0 Mark Mcquater is the chief executive of Revolution Bars Group

DOUGLAS JACK in Edinburgh, Glasgow and Aberdeen, has said before that it had “significan­t concerns regarding both value and deliverabi­lity” of Deltic’s approach.

But Deltic – whose estate spans 57 nightclubs – said yesterday it was disappoint­ed by Revolution’s “instant dismissal” of the proposal and wanted to take the merger plan straight to shareholde­rs.

“Deltic has determined that the merger proposal... is best shared directly with Revolution shareholde­rs as it is they who ultimately need to determine the future of Revolution rather than its directors.”

Deltic, which has to put forward a firm offer or walk away by 5pm on 10 October under City takeover rules, added that it had now given Revolution access to its books.

The latest twist comes after Revolution chief executive Mark Mcquater revealed revealed earlier this week that annual profits had tumbled 29 per cent to £3.6m and cautioned over cooling autumn sales. The firm said like-forlike

“With such strong growth and returns, there is a case for equity offers being as attractive as cash offers.”

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