Caledonia Investments has cooked up a deal to buy the Channel Islands' leading pub owner and brewer Liberation from Legal & General.
Liberation, which operates 94 mostly freehold pubs in the Channel Islands and South West of England, is eyeing further expansion on the mainland, which Caledonia has said it will back with £40m of funding.
The company also owns two breweries, the 145-year-old Liberation Brewery on Jersey and Butcombe Brewery in Bristol, as well as three drinks distribution companies.
The deal has valued Liberation, which is currently owned by LGV Capital (a branch of Legal and General), at £118m and is expected to complete in the summer.
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"We are pursuing an M&A strategy in the West Country but won't be looking to invest in newbuilds," Liberation chief executive Mark Crowther told City A.M.
"We will be looking for good quality tenanted and perhaps also managed pubs with strong food offerings and the potential for accommodation.
"There are already two or three South West pubs that have planning permission to put in 10 to 12 bedrooms.
"We already have 75 pubs in the Channel Islands so our opportunities to expand there are quite limited at this point. Liberation will be looking to expand in an area around our Butcombe pub that will probably reach as far as Exeter, Hampshire and the Cotswolds," Crowther added.
The pub group was founded in 2008 and made £1.9m in pretax profit last year, while it had £113m in gross assets on its books.
Duncan Johnson, head of unquoted investments at Caledonia, said: "We are attracted to the business by its high quality pub estate and leading market position in the markets in which it operates.
"We believe that wth 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."