Young’s acquire Geronimo Inns for £60 million
Geronimo Inns – the 26 outlet strong chain of pubs, was acquired today by the Pubs and Brewery group – Young’s & Co for an all cash deal of £60 million.
Geronimo Inns was started about 15 years ago by the husband-wife duo of Rupert and Jo Clevely. The total number of outlets grows by about 10 percent for Young’s, from the existing 221 pubs and more importantly adds 22 outlets in Central London. The chain currently generates an average of £22,000 in sales every week. The couple jointly held around 33 percent in the business and will get around £8 million from the sale.
Stephen Goodyear, chief executive of Young’s said: “The acquisition fits very well with our expansion strategy, which is focused on high-quality, food-led, managed houses in the London area”. Since 40 percent of revenue comes from foods for Geronimo, it offers considerable leverage to Young’s to maintain control over the quality of the food. Explaining the synergies of operation, Mr. Goodyear further added: “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”.
In a statement released on Thursday, Geronimo said it expected an EBITDA (Earnings Before Interest, Tax and Depreciation) of £8.2 million for the current year. Young’s will be paying 7.3 times Geronimo’s 2010-11 EBITDA and hopes to save £1.5 million annually in costs. The acquisition will be accretive for the company and will enhance earnings per share in the first year itself.
Mr. Clevely will continue as the Managing Director of Geronimo and will be joining the board of Young’s, while his good wife will look after the design and ambience aspect of the pubs, a key differentiating factor for the brand.
“Obviously, when you’ve built a business with your wife and done it all together, you have mixed emotions, but we’re really excited about this next chapter and where Young’s can take the business”, he signed off.