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Punch to bid on Allied pubs
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June 21, 1999: 9:55 a.m. ET
Whitbread $3.6B offer for Allied's 3,500 pubs in doubt as Punch enters bidding
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LONDON (CNNfn) - Punch Taverns started a bidding war in the U.K. pub sector Monday when it confirmed it will try to scuttle a $3.6 billion deal for the 3,500 pubs owned by beverage giant Allied Domecq.
Privately-owned Punch, in which U.S.-based private equity fund Texas Pacific recently took a 70 percent stake, confirmed it will launch an all-cash bid "on superior terms to those represented by Whitbread's offer."
Whitbread's all-paper bid in early May angered Punch, which complained it hadn't even had a chance to look over Allied's pub properties.
The latest move was widely anticipated after Punch said it would make an offer once it had had a chance to study the books. "We have never made a secret about our intention to make an offer for Allied Domecq's retail division on superior terms to those offered by Whitbread," Punch Chairman Hugh Osmond said.
A source close to the negotiations indicated that Punch would disclose the details of its bid by the end of the week but hadn't released them so far in the hope of getting the recommendation of Allied's board.
Allied directors already have recommended Whitbread's offer to their shareholders, who are due to vote on the bid on July 2.
Punch certainly has the fire-power to succeed with any bid. Along with Texas Pacific, the company also has pulled the U.K.'s No. 2 brewer, Bass, into the deal.
The two companies have signed an agreement under which Bass will buy "a significant number of the Allied managed [pub] sites from Punch for around 1 billion pounds following a successful Punch offer," Punch said.
The shares of the three listed groups involved had a modest reaction to the news. Allied's stock was up just under 1 percent at 617 pence, while Whitbread was 4 pence higher at 1,046. Bass shares lost 0.77 percent to trade around 966 pence. 
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