Cerberus Capital Management has bought Admiral Taverns, once the UK’s third-largest largest pub company, from Lloyds Banking Group for around £200m in cash, severing the bank from one of its largest individual losses in the legacy HBOS commercial property loan book.
Underbidders for the UK pub company are understood to include private equity firm Alchemy Partners.
PriceWaterhouseCoopers was appointed by Lloyds and admiral in October to find a buyer for Admiral, while Cerberus was advised by Sapient Corporate Finance.
The sale to Cerberus, at a price understood to be around £200m, is at the lower end of analysts’ £200m to £250m value estimates at the time of PwC’s appointment.
Cerberus is expected to invest fresh capital into Admiral to aid with select strategic acquisitions in future, potentially including group transactions, while the company will remain under management of executive chairman Jonathan Paveley and managing director Kevin Georgel, who are credited with returning the pub company’s fortunes around.
Admiral, which reported underlying profits of £27m for the year to last June, was founded by the Landesberg and Rosenberg families in late 2003, has trimmed its pub portfolio by around 1,000 to about 1,100, after Lloyds Banking Group completed a debt-for-equity swap and put the pub company into administration in November 2009.
Lloyds wrote-off a reported £600m of debt – one of the bank’s largest losses in a single investment from its legacy property loan book – out of a total of debt and equity exposure of £855m, taking effective control of the company and replacing senior management with Paveley and Georgel.
Paveley said of the Cerberus deal: “This is a great transaction for Admiral Taverns and a tremendous start to 2013. We are delighted that Cerberus has chosen to invest in Admiral and that it recognises Admiral’s future potential. Cerberus’s support will help Admiral develop the business further and strengthen its reputation among pub licensees as the best tenanted pub group in the country.”
Senior managing director at Cerberus, Lee Millstein, said: “Admiral has one of the strongest management teams in the UK leisure industry and we are pleased to be working with them. Their successful transformation of the Admiral business into a leading UK pub group has put the business on an upward trajectory. Admiral’s business provides an ideal platform for the acquisition of additional tenanted pubs in the UK.”
This is the second sale in the last month by Lloyds to Cerberus, led by head of European real estate Ron Rawald, following the global private equity firm’s acquisition of the Tritax loan, secured by 11-strong portfolio throughout the UK.
Cerberus paid £85m for the Tritax loan, which had a remaining balance of £150m, and closed both deals just days before Christmas.
The Tritax portfolio includes the 600,000 sq ft Quorum Business Park in Newcastle, and was Cerberus’ second Tritax loan acquisition from Lloyds, after the bank sold an outstanding £95m loan, secured by the 1m sq ft Glasgow Maxim office and logistics park in March 2011.
Cerberus paid around £30m for Trixax’s Glasgow Maxim office loan, according to BBC News’ website at the time, reflecting a 68.4% discount.
CoStar News also understands that Cerberus is among the shortlisted bidders on Lloyds’ €850m Project Chamonix.