Fortress buys Punch Pubs from Patron Capital

The company's management is investing to maintain its equity interest in the company alongside Fortress.

No additional debt financing will be provided as part of the deal, according to a statement.

Sky News reported in November 2021 that Punch Pubs was in talks for a potential GBP 1bn sale to Fortress. The Financial Times confirmed this valuation in later reporting.

Patron Capital and May Capital acquired Punch Pubs (then known as Punch Taverns) in 2017 in a deal that valued the business at GBP 1.8bn. Patron invested via Patron Capital V, which held a final close in July 2016 on EUR 949m.

May Capital was formed in 2013 and has solely invested in the pub sector to date. It previously owned Hawthorn Leisure alongside Avenue Capital; the company was sold to property investor NewRiver for GBP 106.8m in 2018.

Punch Pubs sold the majority of its pubs to Heineken following May and Patron's investment. During the investment period, Punch Pubs' growth was supported by a series of acquisitions, including its GBP 45m acquisition of Laine Pub Company in 2018. Most recently, the company acquired 56 pubs from Young's Ram Pub Company in July 2021.

Fortress has previously invested in the adjacent food and beverage sector; in August 2019, it acquired Majestic Wine's retail and commercial operations (Majestic Wine Warehouses and Les Celliers de Calais) for a total consideration of GBP 95m. Earlier in 2021, the GP was part of a bidding war for UK-based supermarket chain Morrisons, ultimately losing out to Clayton Dubilier & Rice, as reported.

The announcement comes amid a challenging time for the UK hospitality and leisure sectors, with bookings cancelled due to concerns about the new omicron coronavirus variant at a time of year that many establishments count on for a significant portion of their revenues.

Other sponsors holding assets in the sector include TDR Capital, which owns a stake in pub operator Stonegate Pub Company; TDR established the business in 2010 to acquire 333 pubs from Mitchells & Butlers. The GP finalised the transfer of the company to its TDR Capital Stonegate LP continuation fund in 2018, according to Unquote Data.

Previous funding
TPG acquired the business in an GBP 825m buyout from BT Capital Partners in September 1999. The business listed on the London Stock Exchange in May 2002.

Company
Founded in 1997, Punch Pubs operates 1,300 pubs across the UK. It employs 300 staff, with a further 20,000 in its pubs.

People
Punch Pubs & Co – Clive Chesser (CEO).
Patron Capital Partners – Stephen Green (senior partner).
Fortress Capital – Cyril Courbage (managing director).

Advisers
Equity – Rothschild & Co (corporate finance); HSBC (corporate finance); Sidley Austin (legal).
Vendor (Patron Capital Partners) – Barclays Bank (corporate finance); Hogan Lovells (legal).

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• Topics
• Exits
• Buyouts
• UK / Ireland
• Consumer
• United Kingdom
• Secondary buyout
• Patron Capital Partners