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U.S. fund joins pub fray
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May 19, 1999: 11:50 a.m. ET
Texas Pacific buys 70% of Punch Taverns; may enter pub bid battle
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LONDON (CNNfn) - A bidding war is frothing in Britain's pub sector after the U.S.-based private equity fund Texas Pacific announced Wednesday it has taken a 70 percent stake in pub operator Punch Taverns.
Texas Pacific's cash will give privately held Punch some financial firepower in an effort to scuttle a possible $3.6 billion deal between the brewer Whitbread and the beverage company Allied Domecq. Whitbread is in exclusive talks with Allied to buy the latter's 3,500 pub holding.
Punch was annoyed to be left out of those negotiations, and has complained that it should be allowed the access to Allied's books that Whitbread is enjoying.
A U.S. fund gets involved with this U.K. institution
News that Texas Pacific has joined forces with Punch is bound to boost speculation that a competing bid will appear.
"We are delighted to have TPG as shareholders; they make the perfect partner to drive Punch forward," Punch Taverns chairman Hugh Osmond said in a statement. "We look forward to working with them on the many major acquisition opportunities available in the pub sector."
Texas Pacific Managing Director Stephen Peel told Reuters, "Allied is one of the estates that would be an attractive combination with Punch," although he added, "the investment is not predicated on that."
The cost of the 70 percent stake bought by Fort Worth-based Texas Pacific has not been divulged. Bankers Trust, which previously had a 45 percent holding, would not comment on its investment position.
Texas Pacific Group, formed in 1993, has $2.5 billion in investment capital, and has also invested in such companies as Continental Airlines, Virgin Entertainment and Ducati, the motorcycle maker.
Other potential bidders for the Allied pubs business include the Japanese finance house Nomura. Through several subsidiaries, Allied owns some 4,600 pubs, making it the largest operator in the United Kingdom.
-- from staff and wire reports
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Allied Domecq
Whitbread
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