A £53.8m offer by Fuller, Smith & Turner, the London-based regional brewer and pub owner, for the Capital Pub Company has been rejected. The board of the Capital Pub Company has characterised the offer as substantially undervaluing the business and its prospects. The Capital board has also deemed it inappropriate to engage further with Fuller on the proposals.
Capital has reaffirmed that it has a clearly defined growth strategy of expanding its estate organically and through highly selective acquisitions. This strategy has built the estate to 34 London pubs and delivered sales growth of 24% in the current year. It plans to grow its estate to 45-50 pubs over the next two years to further enhance shareholder value.
In response, Fuller has stated that it believes there are considerable risks with Capital’s growth strategy, which will likely require further equity issuance, and that could dilute the overall quality and attractiveness of Capital’s estate and have a negative impact on valuation over time.
Fuller points out that its offer of 200 pence per share would provide Capital shareholders with the certainty of a cash exit in the near term at a substantial premium. Fuller has expressed disappointment that Capital’s board has declined to engage with it so far.