The pubs are 95% freehold or long leasehold, in predominantly suburban or city locations and are operated as a tenanted estate.
C&C has spent £37 million (€40m) – to be funded from existing C&C facilities – buying into 47% of the issued capital of Admiral. The remaining equity is provided by Proprium Capital Partners and Admiral’s management team who will remain invested and continue to lead the business.
Proprium Capital Partners is a privately-held, real estate-focused, principal investing firm.
In Admiral’s latest audited accounts for the 52 weeks to the 28th May 2016, the group had underlying EBITDA of £25.2 million (€27.4m) and an underlying EBITDA margin of 36.2% with gross assets of £231.8m (€251.7m) and gross property assets valued at £244.3 million (€265.2m).
Admiral will be accounted for as an associate of C&C.
C&C believes that the investment will deliver significant economic and route-to-market benefit to its GB businesses through:
- collaboration with a highly experienced and skilled management team
- participation in a resilient and growing earnings stream from a quality, tenanted pub estate
- direct access to 845 pubs mainly across England and Wales through a procurement and supply agreement
- mid-single digit earnings accretion and attractive returns on equity in the first full financial year following completion and
- a long-term commitment from its partners to develop the business.
“C&C has a long and successful track-record of supplying and providing financial support to local pubs within the independent free-trade in Scotland and Ireland,” commented C&C’s Chief Executive Stephen Glancey, “In the UK, the tenanted pub model is a key component of the pub industry. When well-invested and with the right operator and product range, it can provide excellent sustainable returns to all participants.
“For C&C, this is an attractive opportunity to create a new long-term investment in the important on-trade channel without taking significant financial and operational risk. The investment will provide our brands with improved distribution in some of the best community pubs across the UK with an opportunity to enhance on-trade penetration further over time.”
The transaction is subject to FCA approval only and is expected to be complete by the end of November.