Stonegate tables £101m bid in battle for Revolution Bars

THE battle for control of cocktail chain Revolution Bars intensified yesterday after pub chain Stonegate tabled an agreed £101m cash offer, prompting rival Deltic to say it was weighing a fresh approach.

Stonegate said its 203p per share offer for Revolution – which is up marginally on last month’s 200p offer – is now backed by the board. It also has the support of two of Revolution’s major shareholders, Artemis Investment Management and Castlefield Fund Partners, which own 14.8pc and 4.2pc of the company respectively.

Nightclub owner Deltic had tried to gatecrash the party earlier this month by submitting a counter proposal, which would have seen the two companies merge and remain listed.

Undeterred, Deltic has once again claimed the Stonegate offer “significantly undervalues” Revolution and that while it is still thought a merger between it and Revolution would be best for shareholders, it is considering a possible cash offer.

The Stonegate offer is 62.4pc higher than the closing price on July 28, the day before the offer from the Slug and Lettuce owner became public. However it is only marginally higher than the 200p price at which Revolution floated in 2015, and shares rose above Stonegate’s offer price yesterday, up 12.25pc at 208.5p, suggesting traders expect the battle to run on.

Stonegate, the fourth largest managed pub company in the UK, has 689 sites. Revolution has 68 sites, mostly under the Revolution brand but also a growing number of Revolución de Cuba Latin America-themed bars.

The offer now needs to be formally put to a shareholder vote and must get 75pc approval to become binding. The offer documents will be published within the next 28 days.

Revolution shares have had a rocky few months, with a 45pc dip in May to 111p after the chain admitted that costs from factors such as the National Living Wage were rising faster than anticipated.

It also said its new bars were taking longer to hit profit targets, meaning it expected adjusted cash profits to be flat on the prior year.

Keith Edelman, non-executive chairman of Revolution, said Stonegate’s offer represented an “attractive and certain value in cash” for shareholders.

Ian Payne, chairman of Stonegate, said Revolution’s premium offering was “highly complementary” to its existing offering and its presence in town and city centres was a key factor behind the purchase.