Mitchells and Butlers acquires ‘majority' of Orchid estate

16 June 2014 by
Mitchells and Butlers acquires ‘majority' of Orchid estate

Pub and restaurant firm Mitchells and Butlers has acquired the majority of the Orchid Group estate, in a deal worth £266m.

The company, which operates brands including All Bar One, Harvester and O'Neills, has taken on 173 pubs - 158 of which are freehold or long leasehold - as well as Orchid's head office.

Mitchells and Butlers indicated that it would convert 96 of the pubs to its own brands and formats (such as Harvester, Toby Carvery, Ember, Miller & Carter, Castle and Vintage Inns) over a two-year period, saying it hoped the move would deliver "substantial sales and profits uplifts". M&B currently has average weekly sales in its sites of £22,700, compared with an average of £15,300 per week in Orchid sites.

The group also anticipated an annual saving of £6m available from rationalising the support functions and combining the purchasing operations of the two groups.

Alistair Darby, chief executive of Mitchells & Butlers, said: "The acquisition of the majority of the Orchid estate will accelerate Mitchells & Butlers' growth and present significant opportunities for value creation through cost savings, synergies and the conversion of Orchid pubs to Mitchells & Butlers brands. We greatly look forward to welcoming the Orchid employees who will transfer to Mitchells & Butlers as a consequence of this acquisition."

M&B paid cash for the Orchid business, most of it from its existing cash resources, as well as putting into place unsecured facilities totalling £150m from existing lenders.

The Orchid sites that M&B is acquiring are spread across the UK, with a bias towards the South East and the North West of the UK. The deal is expected to take the total M&B estate to almost 1,800 sites.

Orchid was reported to have been put up for sale by Deutsche Bank in summer last year. Up until the deal with M&B, the group ran around 290 pubs and restaurants.

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