Punch flotation is back on

By REUTERS
Updated: 19:00 EST, 19 May 2002

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PUBS company Punch Taverns has quietly relaunched its flotation, slashing the price of the offer following its dramatic eleventh-hour retreat last week.

The offer has been pitched to institutions at 230p a share, compared with the original target 250-300p. Punch, the country's second-largest pubs group, is expected to close the already over-subscribed issue later on Monday.

The shares will start trading on Wednesday 22 May and give the group, which owns 4,250 leased and tenanted pubs, a market capitalisation of around £570m.

The group is expected to confirm the new offer has been successfully subscribed for at the lower price later on Monday and detail the size of the stake it is selling.

Punch withdrew its original offer late last Wednesday, hours before its shares were to start trading. Its move followed the previous week's flotation flop of retailer HMV Group. Punch's adviser Merrill Lynch has been blamed for pricing the offer too high, which had deterred investors. Merrill said at the time that it feared the shares would slump as soon as they started trading.

The original offer was set to raise £250m and result in a free float of 33-40%. The new issue will raise less money, which sources said would be about £150m. That would amount to a free float of around 25%.

The relaunch may give new heart to flotations planned by betting shop chain William Hill, energy services group John Wood and quality control firm Intertek Testing Services. Several others have yet to announce firm listing plans such as DIY retailer Focus Wickes and luxury retailer Burberry, which is being spun off from GUS.

When Punch's offer was launched last month, the grey market went to 300-320p a share compared with the company's target range of 250-300p. But following HMV's poor debut, the grey market for Punch fell to 245-255p.

Punch was formed in 1997 by Hugh Osmond, who earlier had floated restaurant chain PizzaExpress, when he bought former brewer Bass's leased pubs estate. It came to prominence when Osmond snapped up Allied Domecq's 3,500-strong pubs estate in 1999 from under the nose of Whitbread.