StockMarketWire.com - Young & Co's Brewery plc has acquired London-focused pubs operator Geronimo Group Limited from its shareholders, mainly Penta Capital plus CEO Rupert Clevely and Jo Clevely, for £60m in cash.

CEO Stephen Goodyear said the acquisition was 'an excellent opportunity to accelerate the growth of the Young's managed estate'.

Following the deal, Young's managed estate will be increased by more than 20% to 148 pubs, taking the total estate to 247 pubs.

Geronimo, founded in 1995, operates 26 food-led managed pubs, with 22 in Central London, three at Heathrow and one in Surrey.

In the year to June, Geronimo's pre-overhead EBITDA was £6.1m and it is expected to deliver pre-overhead EBITDA of £8.2m for the current year.

Young's said the increase was being driven by like-for-like growth, the full-year impact and increased maturity of new openings in the year to June 2010 and the opening of The White Horse in the Broadgate centre in October.

The recent openings and the planned opening of a unit in the new Westfield Stratford Shopping Centre in late 2011 were expected to increase EBITDA by around £1m on an annualised basis.

Young's said Geronimo has overheads of about £3m and the group expected to make cost savings of £1.5m through combining the businesses. On a fully integrated basis, further savings of around £1m would be available.

However, it said it plans to retain a separate operating team focused on the rollout of the Geronimo format, maintaining its individuality and delivering continued strong organic growth.

The Geronimo management team will be staying with Young's. Rupert Clevely will join as an executive director with immediate effect and act as managing director-Geronimo. Jo Clevely will continue to drive the design strategy integral to the Geronimo format.

The transaction is expected to be earnings enhancing in the first full year of ownership.

It is being financed by a new £100m five-year bank facility with RBS and Barclays, replacing the previous £40m revolving credit facility.

Young's said it retained a robust balance sheet following the acquisition and a robust long-term financing package. It planned to enter swaps so that £100m of its debt would be at fixed rates.

Goodyear added, 'The acquisition fits very well with our expansion strategy which is focused on high quality, food-led, managed houses in the London area, a strategy that we will continue to pursue with both the Young's and the Geronimo formats.

'Geronimo's team also brings considerable expertise in the operation of leases and concessions in high footfall retail locations such as airports and shopping centres and this represents a new growth opportunity for us.'

Young's shares were up 0.5p at 610.5p.



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