After nine months of takeover negotiations and poor performance, the Wolverhampton & Dudley Breweries board decided unanimously to reject the 480p per share offer from Pubmaster. However, a second bid could challenge the board's resilience in the face of mounting shareholder pressure.
A takeover has been looming over the heads of Wolverhampton & Dudley Breweries for some time. Poor results from the pub and restaurant sector of the business, which includes over 900 managed and tenanted pubs, put increasing pressure on the board for a change. In August 2000, Wolves was fighting for its independence as it rejected a second offer from Robert Breare, backed by private venture capital firm Botts & Company.
Rather than accepting this offer, which was first tabled at the beginning of 2000, the board have been seeking alternatives to a sale. W&DB first bought the Marston's brewery at Burton upon Trent, closely followed by a takeover of the Mansfield brewery in January 2000 for GBP375 million. However, although these acquisitions gave it a greater share of the Midlands market, the company has remained in the unprofitable middle order of UK brewers. In September 2000 the company announced plans to split itself into three - managed and retail pubs, tenanted pubs, and brands, which will concentrate on Banks' bitter and Pedigree, its best-selling beers. It hoped this would unlock shareholder value and make a takeover unnecessary.
However, the share price has remained below 500p per share and potential buyers are still circling. This latest offer, from the Pubmaster group, through its acquisition vehicle, Pubmistress, values the company at GBP453 million (480p per share), which is 11p per share lower than the value conditionally proposed by Pubmaster last week. Pubmaster now has until Friday to submit a revised bid. Although Robert Breare has now dropped out of the bidding in his own right, he may yet own a portion of the Wolves portfolio as, through deal with Pubmaster, he has agreed to buy 290 of the Wolves pubs in the event of a successful Pubmaster bid.