Young’s acquires City Pub Co for £162 million
Pub group and British brewery Young’s has acquired City Pub Company’s 54 sites in a deal worth £162 million.
The deal, which brings Young’s pub estate up to 279, will see all City Pub Company pubs across southern England and Wales absorbed into Young’s portfolio.
Speaking to the drinks business, Young’s CEO Simon Dodd said: “We are excited to be announcing the proposed acquisition of City Pubs, with the full recommendation of their board.”
Speaking about the alignment of the pub estate’s strengths, Dodd admitted: “City Pubs is an excellent business we have followed for some time, and one which aligns closely with Young’s in terms of both strategy and culture. Like us, City Pubs operates premium, individual and well-invested pubs and rooms, with a focus on the highest standards of customer service. Both businesses have performed well in a tough trading environment recently, testament to the strength of our business models, people and approach to customers.
Beer industry experts have hinted that the potential roll out of Young’s beers to another 54 pubs across the nation is not necessarily something that is going to be favourable to beer lovers.
Lamenting about the deal, beer writer, former editor of the Good Beer Guide and industry veteran Roger Protz said: “It would be sad if the City Pubs lose their local beers and are replaced by Young’s. The Young’s beers were good and carefully matched at Charles Wells but I have no idea where they are now brewed in the CMBC empire now. I was unimpressed by my most recent tasting. Young’s Ordinary is now very ordinary in my view, no longer the wonderful London hoppy delight.”
Author and beer writer Pete Brown agreed and said: “It (Young’s) was revered back in the day, but has been shunted round contract brew to contact brew. It’s not really about the beers any more. I do miss Young’s Special London Ale though.”
Cask Marque quality assessor Nigel Sadler highlighted that, even though Young’s beers are “not dynamic,” the brewing and dispense quality standards remain high.
Sadler remarked: “Young’s beers are still brewed at the Eagle Brewery in Bedford as far as I know and whilst not dynamic are always of good quality.”
Sadler hinted that he sees them “now and again on my Cask Marque rounds” and always tries them when he sees them and admitted that they are “reasonable enough mostly” but agreed that the calibre “as always, depends on the pub”.
Sadler added: “I wouldn’t be disappointed with an offer of a Young’s beer and one or two other guests as long as beer quality remains paramount.”
The decision to sell up to Young’s largely comes down to the impact that the pandemic has had on the industry as a whole, with business owners looking more towards pubs that can bring in ancillary income from accommodation as food and drink sales — a trend that this sale re-amplifies.
Speaking to db, City Pubs executive chairman Clive Watson said: “This transaction gives City Pub Group shareholders both an attractive cash offer for 75% of their holding and a stake in Young’s to benefit from future growth of the enlarged company.”
Watson admitted: “Like all hospitality businesses, the pandemic derailed City Pubs’ progress, but it has been able to produce a strong performance since with a more focussed, reshaped business with the lowest debt in its history and a solid strategy in place.”
Giving city Pubs a vote of confidence for what has been created, Dodd said: “We believe that City Pubs is an excellent fit with Young’s and the combination of the two businesses represents a compelling opportunity for all stakeholders. It will allow us to expand our estate through the addition of a complementary, high-quality pub and bedroom portfolio, with the potential for the benefit of significant operational synergies to be realised by both sets of shareholders, through the partial share offer.”
Watson added: “We are very proud of the company we have created and the business that has been built. None of that would have been possible without a great team,” but noted that the deal was not the group’s first offer tabled and revealed that being “mindful of the uncertain economic climate, high interest rates and inflation in particular, and our plans for long term growth as an independent company, initial approaches were rejected”.
Young’s has told db that “it’s very early days” and has said it “cannot comment” on the planned rollout of beers across the estate at the moment, but will update in due course.