Greene King agrees deal for restaurants
PUBS and brewing group Greene King has agreed a £68.1million deal to acquire the Loch Fyne restaurant business.Bury St Edmunds-based Greene King, which announced last month that it was in exclusive talks with private equity firm Hutton Collins, the seafood chain's majority owner, plans to double the size of the 36-branch Loch Fyne network - including the conversion of some of its pub properties.
PUBS and brewing group Greene King has agreed a £68.1million deal to acquire the Loch Fyne restaurant business.
Bury St Edmunds-based Greene King, which announced last month that it was in exclusive talks with private equity firm Hutton Collins, the seafood chain's majority owner, plans to double the size of the 36-branch Loch Fyne network - including the conversion of some of its pub properties.
Greene King, which owns more than 1,500 pubs across mainland Britain, is seeking to diversify its estate following the ban on smoking in pubs, which is expected to result in food coming to represent a greater proportion of sales in the licensed sector.
“Loch Fyne Restaurants is an established and successful premium brand in the casual dining sector,” said Greene King in a statement yesterday.
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“It operates a proven food concept which will help to develop Greene King's existing offer and deliver immediate entry into the premium branded food segment. A number of its restaurants already trade in former pubs.
“Loch Fyne has a strong development pipeline and plans to increase the number of outlets by around 20% within this financial year. Over the medium term Greene King sees potential to double the number of existing sites, including the conversion of a number of Greene King pubs.”
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Loch Fyne Restaurants was spun out of Loch Fyne Oysters in 1998 - it continues to source many of its supplies from its former sister company, located on the banks of Loch Fyne in Scotland - and was sold for £33million in a management buy-out deal backed by Hutton Collins in 2005.
Chief executive Mark Derry and other senior managers at the restaurant business have committed to staying with the chain to assist in its continued growth within the Greene King group.
The all-cash consideration will be financed by Greene King from its existing debt facilities. The restaurants are projected to achieve underlying earnings after overheads of more than £8million for the 12 months to June 2008, and the acquisition is expected to be earnings-enhancing in the first full year of ownership.
Rooney Anand, chief executive of Greene King, said yesterday: “Loch Fyne is a high quality, well-respected British restaurant brand which gives us greater access to the premium end of the market and brings to our business further operational expertise.
“We have a strong track record of maximising the benefits from our acquisitions and this will be no exception: we greatly look forward to welcoming our new colleagues on board.”
Mark Derry, chief executive of Loch Fyne Restaurants, added: “The tie-up with Greene King is an excellent development for Loch Fyne. It gives us the opportunity to capitalise on our already strong reputation and to accelerate the expansion of our business.
“We're delighted to have found a buyer who recognises our strengths and whose style of management fits so well with our own. We believe our customers and employees will have every reason to celebrate the agreement.”