E-Malt.com News article: 4666

United Kingdom: Britain's Wolverhampton & Dudley Breweries (“W&DB” or “Wolves”) announced on April 11 it is in acquisition talks with brewer and pub owner Jennings Brothers. W&DB, which brews Marston's Pedigree ale, said it was considering a 430 pence-per-share offer for Jennings, which would value it at around 46 million pounds ($86 million).

The 177-year-old northern brewer and pub operator Jennings brews beers such as Cumberland Ale and Cocker-Hoop, and also operates 128 pubs across northern England, 55 of them in the Lake District. W&DB said the estate would fit well with its own estate of 553 managed "Pathfinder Pubs" and its "Union Pub Company" of 1,582 leased pubs.

W&DB said it would continue developing Jennings' brewery in Cockermouth, in the Lake District, which produces Cocker-Hoop and other beers including Crag Rat, Cumberland Ale and Cross Buttock, according to Reuters.

"This should be viewed as a bolt-on acquisition that is in line with strategy, but our initial reaction to the price is that it is expensive," analyst Nigel Parson of Williams de Broe said in a research note entitled "Wolves & Dudley -- On the Prowl." W&DB has only recently finished digesting the 460-pub estate of smaller rival Burtonwood, which it agreed to buy in December for 119 million pounds.

The pub sector has seen a string of deals in recent years, the latest major deal being Enterprise Inns' acquisition of Unique with 4,000 pubs last March.

W&DB said it would try to safeguard as many jobs as possible at Jennings' Cockermouth brewery, which Bridgewell Securities estimated generated 18 percent of profits. W&DB Chief Executive Ralph Findlay said in a statement: "We believe our proposals will assist in the further development of the Jennings business and provide good opportunities for its lessees, beer brands and for employees."

But Parsons of Williams de Broe sounded a note of caution over Wolves' commitment to the Jennings brewery. "This anticipates local opposition to the proposed deal but reduces synergy opportunities from closing the operation," he said.

W&DB said it already received an irrevocable offer from Jennings' largest shareholder, Frederic Robinson Ltd, representing around a quarter of Jennings' shares.

Shares in Jennings soared 27 percent to 413-1/2 pence by 0940 GMT. W&DB shares were flat at 1,131 pence, valuing the group at around 867 million pounds, Reuters commented.


13 April, 2005