Cerberus buys UK pub chain from Lloyds

The New York based firm has reportedly made a £200m investment into Admiral Taverns, the pub group behind 1,100 pubs.

Cerberus Capital Management, the New York based private equity firm, has purchased Admiral Taverns, a pub group in the UK, from its lender, the UK bank Lloyds Banking Group.

Chester-based Admiral Taverns announced the investment today but declined to divulge its size. According to commercial property website CoStar News, Cerberus has bought the pub group for £200 million (€246 million; $320 million).

The transaction sees Cerberus acquire 1,100 pubs across the country and provides a complete debt and equity exit for Lloyds. These will be added to its more than $20 billion of assets under management across various business lines predominately related to private equity and real estate.

Admiral said the deal “marks the next phase following a three year transformation of the business” following Lloyds refinancing of the business in 2009 which included a debt for equity swap. The business was reported to have been one of Lloyds’ biggest loss making enterprises inherited in its takeover of Halifax Bank of Scotland, another UK bank.

Nonetheless, since the restructuring, the management team have managed to make the business more attractive to potential bidders and, as such, Admiral said the deal would mean its existing management team would remain in place “to lead a new phase of development”. The company also said that its day-to-day operations would be unaffected and that the purchase by Cerberus would mean it could pursue growth opportunities.

Admiral’s executive chairman, Jonathan Paveley said of the transaction: “This is a great transaction for AdmiralTaverns and a tremendous start to 2013.  We are delighted that Cerberus has chosen to invest in Admiral and that it recognises Admiral’s future potential.  Cerberus’s support will help Admiral develop the business further and strengthen its reputation among pub licensees as the best tenanted pub group in the country.”

Lee Millstein, senior managing director at Cerberus, described the purchase as an ideal platform with which to acquire more pubs in the UK. He also praised the existing management team: “Their successful transformation of the Admiral business into a leading UK pub group has put the business on an upward trajectory,” he said.

PWC advised Lloyds and the Admiral Taverns management. Cerberus was advised by Sapient Corporate Finance and law firm Linklaters.