Nightclub operator Deltic has put the brakes on an agreed deal between Revolution Bars and Slug and Lettuce owner Stonegate Pub Company, with its own all-share proposal.
Shares in Revolution were down two per cent at the time of writing.
Students' favourite Revolution has already agreed to a £101.5m takeover offer made by Stonegate, but Deltic has now proposed a merger with the group. Revolution previously rebuffed a merger proposal from Deltic, stating that it “did not see any merit” in Deltic's proposal and that “a combination of Revolution and Deltic is not in the best interest of shareholders at this time”.
The new proposal would create a combined company under which existing Revolution shareholders would own 65 per cent and Ranimul (Deltic's holding company) shareholders would hold 35 per cent of the enlarged group.
Deltic laid out its proposal as follows:
- The new group would be run by the current Deltic management team
- It "should benefit from approximately £6.8m of currently identified pre-tax cost synergies and approximately £0.9m of pre-tax financing synergies"
- The new firm would maintain its listing on the main market
- The deal could be "expedited rapidly and without significant incremental cost"
The nightclub firm has made clear its disapproval of the Revolution/Stonegate deal, stating that it undervalues Revolution. Today, Deltic said Stonegate's 203p per share offer is "ostensibly returning the IPO value to shareholders... rather than identifying it as the opportunistic offer Deltic believes it more rightly is".
And while Deltic said it has been "disappointed by Revolution's level of engagement" since its first approach about a merger, it added: "Ranimul considers that its merger proposal should result in sharing a disproportionately favourable merger ratio and synergies to the benefit of Revolution's shareholders, and is willing to do so not least because it demonstrates
"Ranimul's confidence in the future potential of Revolution and current low implied value. By combining the businesses and extracting the synergy opportunities, Ranimul believes the merger proposal creates the opportunity to grow a business with a value very significantly in excess of that represented by Stonegate's offer over the two years following a merger becoming effective."
Deltic now has until 5pm on 10 October to announce a firm intention to make an offer for Revolution.