Patron Capital and Heineken buy £1.8bn Punch Taverns

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Private equity real estate investor Patron Capital and Dutch beer company Heineken have completed the protracted purchase of UK pub owner Punch Taverns.

The takoever, which values the publicly listed company at £1.8bn (€1.96bn), will give Patron Capital ownership of around 1,300 tenanted pubs, while Heineken will own close to 1,900.

The deal was originally agreed in December but was only given the green light by the UK’s competition and markets authority earlier this month.

Patron Capital acquired Punch through a special purpose vehicle before selling part of the business to Heineken.

The company, headed by Keith Breslauer, focuses on alternative areas of the European real estate market. Earlier this year, Patron sold its Generator Hostels business for €450m, having bought the company in 2007.

It has teamed up with private equity company May Capital, which has experience in the UK pub industry, for its investment in Punch.

Punch is financed through two whole business securitisations: approximately £770m of gross debt secured against around 1,900 pubs, and approximately £550m of gross debt secured against around 1,300 pubs.

Heineken is buying the former for approximately £305m, and Patron is retaining the latter.

Punch, which also owns approximately 50 pubs outside of the securitisations, will continue to operate the pubs owned by Heineken for six months under a transitional services agreement.  

Patron said it, together with May Capital, will “pursue, and in some cases accelerate or enhance, key elements of the Punch management team’s strategy, including investing in the pubs, adapting and modernising operating models, such as through the roll-out of the managed operating format, and continuing to sell non-core assets”.

Patron’s equity for the purchase came from its fifth fund, which closed last summer having raised €949m.

Breslauer, managing director of Patron, said: “Completing this complex deal paves the way for an exciting future for Punch as a more focused business.

“This is a company that has undergone a number of challenges and distractions in recent years but has a portfolio of high quality pubs with excellent future potential.

“We are experienced investors in the leisure and hospitality sector, having invested in and grown a range of businesses including Generator, the Spencer Hotel in Dublin and Jupiter Hotels.

“Under private ownership, with strong financial backing and our commitment to continued investment, Punch’s pubs and publicans will have our full support to deal with changing market dynamics and provide their customers with the best possible offer.”

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