- Take-out price could be as high as 280p in spite of share tumble
By James Quinn

South-of-England pub operator Eldridge Pope faces being taken over by a larger operator following this mornings poor trading statement.

Analysts from a number of City brokerages believe that the dive in the companys share price down 13.1% to 118.5p at 1pm - will bolster the chances of the company being taken over.

House analyst James Wheatcroft at Investec Securities said: Bid speculation will buoy the share price, although added that any bidder might want to wait until after second half to make a move.

Wheatcroft said that based on recent takeover transactions in the sector, that had been taken out on eight-to-nine times earnings before interest, tax, depreciation and amortisation, Popes revised EBITDA forecast of 12.3 million for the current year would lead to a take-out price of between 205p and 282p.

James Hollins, at WestLB Panmure, said: The only reason to hold this stock is potential consolidation, and the company has stated that it continues to review all strategic options.

Possible bidders include Greene King, Punch Taverns and Mitchells and Butlers, the soon-to-be-demerged pubs arm of Six Continents.

Pope, which owns 120 managed pubs and 63 tenancies, has struggled on the back of harsh trading conditions, coupled with problems with some of its concepts. Its chameleon bars, Toad, have struggled, and the companys new management teams plans to expand have, according to Panmures Hollins, been undermined by weaker trading and a decision to cut capital expenditure.

Chief executive Mike Johnson has put cost-cutting measures in place to bolster margins in the second half, and said that under-performing assets would be sold off.

Investec downgraded full-year forecasts to 4.1 million pre-tax profit, giving earnings of 11.1p, on the back of an estimated 500,000 loss in the first half.

The downgrade puts Pope on a full-year price-earnings ratio of slightly more than ten times, making it look expensive compared to the sector, but cheap given the potential take-out price.

Eldridge Pope & Co currently in talks, may or may not lead to offer for co


LONDON (AFX) - Eldridge Pope & Co PLC said it is in the early stages of discussions which may or may not lead to an offer for the company.

No other details of the offer were given in the company statement.

ra

14/04/2003 13:57

oops! you mean THAT pope? I had assumed the vatacan variety for a mo!

hmm... a vatacan IPO?
Now that gives pause for thought!

Today I received a standard letter from Folio Wines & Spirits,which I believe is the mail order wine division of Eldridge Pope, informing me that the ownership of Folio will be transferred to The Wine Company with effect from 1st May, 2003. I think the days of ELD may now be numbered, following its earlier announcement on 14 April (post 3)!