The board of bar group Revolution said this morning that it has reached an agreement that will see it taken over by Stonegate in a deal worth £101.5m.
Stonegate is the fourth largest managed pub company in the UK in terms of number of operating sites, trading from 689 premises. It began trading in November 2010 following the acquisition of 333 pubs from Mitchells & Butlers and has since grown in size and scale through a series of strategic acquisitions.
The Revolution Group’s bars focus on the premium segment of the drinks market with its sites operating from late morning until the evening to maximise their trading potential.
All 54 Revolution bars are located in towns or cities and focus on a premium offering centred on cocktails. The Group’s second brand, Revolución de Cuba, was established in June 2011 and has delivered strong returns on investment since inception.
The 14 Revolución de Cuba bars, which are inspired by Latin American themes, focus on a high-end offering to customers, including a rum-led cocktail range, a Latin American food menu and live entertainment.
Keith Edelman, non-executive chairman of Revolution, said: “We believe that the offer from Stonegate represents an attractive and certain value in cash today for Revolution shareholders, reflecting the high quality of the business, its people, market position and future prospects. The Stonegate proposal provides considerable opportunities for our people and for the business as a whole. Stonegate is an experienced operator in this sector that understands Revolution’s ethos with its unique premium bar offering.”
Ian Payne, chairman of Stonegate, said: “We are delighted to announce this agreement with Revolution, which is a business we know well and whose leading position in the premium segment of the drinking out market is a highly complementary addition to our existing offering. Our strong reputation and position in the market firmly establishes Stonegate as the natural home for Revolution’s brands, and will allow us to enhance further the breadth of offer and occasions we cater for.”
Stonegate has faced competition from The Deltic Group Limited, which is also keen to gets its hands on Revolution. The board of Revolution said earlier this month that it did not see any merit in progressing the Deltic merger proposal as it was not in the best interests of shareholders.
However, Deltic was granted due diligence access, which it is currently undertaking with a view to formalising its possible merger proposal including an analysis of synergies.
Following confirmation of the Stonegate agreement this morning, Deltic published an update of its own audited historic financial performance, which shows the strength of its business with an EBITDA for the year ended February 2017 of £13.3m.
It claims Stonegate’s offer significantly undervalues Revolution and said it is also evaluating a possible cash offer for the entire issued and to be issued share capital of Revolution. It said it will make a further announcement in due course.