Revolution Bars Group has rebuffed a merger offer from club and bar operator The Deltic Group as it continues to look at a takeover bid from Stonegate Pub Company.
Deltic, which has 57 clubs and bars around the UK including Pryzm, revealed today that it had made an approach to propose a merger between the two companies.
It followed a £100m bid by Stonegate – operator of 690 bars and pubs – to take over Revolution Bars Group which has 68 bars under the Revolution and Revolución de Cuba brands.
In a statement, Deltic said: “As a competitor, Deltic has observed in Revolution a business with solid growth potential and some great trading outlets that has been negatively impacted by financial management setbacks, whilst having limited scale to retain investor support for a publicly traded company.
“Deltic believes that a combination of its business with Revolution would transform the scalability of the enlarged group, provide scope for material synergies and enable the operational issues within Revolution to be better addressed through Deltic’s management team taking responsibility for both businesses, creating a powerhouse group in its sector that can exploit further opportunities to both expand and consolidate the market.”
However, Revolution quickly moved to say it had rejected the approach. In a statement, Revolution said: “The board confirms that it received a possible proposal from Deltic and thereafter met with Deltic. Based on these preliminary interactions, the board had concerns over both the value and deliverability of the combination and did not see any merit in progressing their proposal as the board believes that a combination of Revolution and Deltic is not in the best interest of shareholders at this time.
“The company continues to engage with Stonegate Pub Company Limited in connection with the possible offer, as announced on 31 July 2017.”
Deltic has urged Revolution’s board to reconsider its position and engage in meaningful discussions with Deltic towards the pursuit of a potential merger.
Its own proposal included the merged businesses remaining on the London Stock Exchange. Deltic believes this “could create significant medium-term value potentially of greater attraction to Revolution shareholders than the possible Stonegate 200p per share offer”.
Deltic added: “Revolution has determined that it does not wish to engage in discussions with Deltic on this basis, so denying its own shareholders the opportunity to consider a choice between exploring the benefits of a potential merger with Deltic and the possible Stonegate offer.
“Deltic is disappointed by this outcome and believes that Revolution shareholders should be aware of alternatives to the possible Stonegate offer.”