Slug & Lettuce to buy 4000 pubs in £3bn Ei deal

The takeover of the Ei Group will add  4000 new publs to Stonegate Pub company’s ( owner of Slug & Lettuce) 765 existing locations . 

Simon Longbottom, CEO of Stonegate is owned by the Cayman Island registered private equity group TDR Capital  said that although the deal  ” slightly dwarfs what we’ve done before  the expanded group would be better able to contend with industry challenges.

The 285p-a-share offer for Ei values the FTSE 250 company at £2.96bn including  £2bn of net debt, 11.4 times its underlying earnings for 2018. Shares in Ei  formerly known as Enterprise Inns, leapt almost 40 per cent on the news.

In May Ei reported that like-for like revenues for six months to the end of March were up 7 per cent to £353m, while profits were up 3.5 per cent to £59m. Sales in its managed pubs were up 6 per cent against a rise of 1.9 per cent in its tenanted estate.

Stonegate operates only managed pubs, under brands like Slug & Lettuce, Walkabout and Yates,

It has grown through a series of acquisitions since it was founded in 2010 with the purchase of 333 pubs from Mitchells & Butlers for £373m. A £102m takeover offer for Revolution  bars in 2017m was rejected but Stonegate has made six smaller acquisitions including the cocktail bar company Be At One, which it acquired for an undisclosed sum in July 2018.