8 September 2000
The Boards of Whitbread PLC (Whitbread) and Punch Retail Limited, a subsidiary of Punch Group Limited (Punch), announce that they have today entered into a conditional agreement for the sale of their off-licence joint venture, First Quench Retailing Limited (First Quench), to Carmelite Acquisitions Limited, a company formed and financed by the Principal Finance Group of Nomura International plc (Nomura). The consideration for the disposal, before payment of fees and expenses, will be £225 million (subject to an adjustment relating to net assets). The sale is conditional on the receipt of appropriate approvals from the competition authorities in the UK which are expected by the end of October 2000.
First Quench is the UK’s leading off-licence chain with some 2,500 stores. Its brands include Wine Rack, Thresher, Victoria Wine and Bottoms Up. For the year to 4 March 2000, First Quench had a turnover of £1,311 million. As at 4 March 2000, it had net assets of approximately £200 million.
First Quench was formed in August 1998 as a result of the 50:50 merger of the off-licence interests of Allied Domecq Retailing Limited (Allied Domecq Retailing) and Whitbread. Following Punch’s acquisition of Allied Domecq Retailing in September 1999, First Quench is jointly owned by Punch and Whitbread. From Whitbread’s perspective the disposal represents a further step in its transformation into a focused leisure business and follows the disposal of the Whitbread Beer Company in May 2000.
Commenting on the transaction:
Graham Frost, First Quench’s Executive Chairman, said: “I would like to thank the company’s management and staff for their continuing commitment and enthusiasm during what has been a very challenging and uncertain time for the company. First Quench looks forward to working with Nomura and to developing the business with them in the future.”
Hugh Osmond, Chairman of Punch, said: “This disposal continues the rationalisation programme that we put in place at the time of our acquisition of Allied Domecq Retailing. Whilst some of the proceeds of the sale will be applied to reduce the outstanding debt of Punch, a substantial amount will be invested in the continued development of our core pub estate where the benefits of such investment have already been shown.”
Guy Hands, Managing Director of Principal Finance Group, commented: “The acquisition of First Quench is a good deal for all concerned. First Quench is not a core business of either Whitbread or Punch. Based on our track record with similar consumer-facing businesses, we believe that First Quench’s full potential can be realised by empowering the management and investing in staff and technology.”