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Bids, Mergers and Takeovers

Caledonia agrees terms for acquisition of Liberation

06 July 2016 11:40

Caledonia Investments (CLDN) agreed terms to acquire The Liberation Group in a transaction which values Liberation at £118m.

Led by CEO Mark Crowther and finance director Declan Hearne, Liberation operates 94 predominantly freehold pubs in the Channel Islands and south west of England, as well as two breweries, Liberation Brewery and Butcombe Brewery, and three drinks distribution businesses.

For the 52 week period to 30 January 2016, Liberation reported EBITDA of £10.6m, profit before tax of £1.9m and had gross assets at that date of £112.8m.

Liberation is enjoying steady growth in trading for the current year.

Caledonia's strategy will be to continue to build Liberation through a combination of enhanced organic growth driven by targeted capital expenditure within the pub estate and acquisitions of both individual pubs and pub groups in the south of England.

Caledonia will make additional capital available to Liberation to effect this strategy.

Richard Grainger, previously chairman of Close Brothers Corporate Finance and Safestore, will join the group board as chairman at completion.

On completion, which is subject to the approval of the Channel Islands competition and regulatory authorities, Caledonia will invest £70.6m in cash to acquire a 98% equity stake, with Liberation's management team subscribing a further £1.4m.

The balance of the purchase costs will be funded by bank debt of £51m, which Caledonia has agreed to underwrite in the event that this is not in place by completion.

Caledonia Unquoted Investments head Duncan Johnson said: "Caledonia has developed a strong relationship with Mark Crowther and his team over a number of years and we are delighted to become Liberation's new financial partner.

"We are attracted to the business by its high quality pub estate and leading position in the markets in which it operates. We believe that with Caledonia's longer term support Liberation will be ideally placed to take advantage of growth opportunities, both within its existing estate and through further selective acquisitions.

"Liberation will complement the other defensive, asset-backed and cash generative leisure businesses in our unquoted portfolio.

"The investment will pay an attractive yield from inception."

Liberation CEO Mark Crowther said: "Following LGV's successful period of ownership, we are delighted to welcome Caledonia as our future new owner.

"We believe that with Caledonia's financial support and long term investment horizon, we can continue to build on our justifiable reputation for quality products and service and extend our market leading business further into the UK mainland."

At 11:40am: (LON:CLDN) Caledonia Investments Plc share price was +2.5p at 2252.5p

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