Punch fires starting gun on demerger

PUNCH Taverns yesterday confirmed that the demerger of its “good” managed estate from its “bad” and highly-indebted tenanted pubs business will take place at the beginning of next month.

The company’s managed division will be known as Spirit, and the tenanted division will retain the Punch name.

They will be separately listed and start trading from 1 August.

Spirit, which includes the Fayre & Square chain and Chef & Brewer, will comprise 803 managed pubs and 549 of the old Punch Taverns’ better performing leased pubs.

Its chief executive will be current Punch boss Ian Dyson, who has outlined a medium term plan that includes paying a dividend from 2012. The new Punch, which will be led by Roger Whiteside as chief executive, will have a debt of around £2bn. Stephen Billingham will become Punch’s non executive chairman in September.

It will pare down its operations from 5,080 pubs to 3,000 in an attempt to keep a lid on costs.

Dyson said: “Separating Spirit from Punch is the right way ahead. Both businesses have different opportunities and challenges. What we are doing is shifting the emphasis from quantity to quality.”

The split was announced in March but was hit by controversy after Roddy Murray, the finance director of Spirit, left the company just two weeks after he started the job.

Panmure analyst Simon French said that the two companies would have a slightly lower cash pile than estimated.

“We reiterate our hold recommendation but have reduced our target price to reflect the £15m shortfall in liquid resources versus our previous expectation,” he said.