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LONDON-The Board of Scottish & Newcastle says it intends to sell all of its managed retail business of 1,450 pubs, restaurants and lodges. The move will help S&N recover its core position of international brewer: it has just bought cider maker Bulmer and is in talks to buy Portuguese brewer Sociedade Central de Cervejas.

S&N Retail’s estate has high average sales per unit at £14,000 ($22,000) per week, with a significant bias to food-led and suburban locations, notably through the Chef & Brewer chain. In Premier Lodge, S&N Retail has the third largest budget hotel brand in the UK, with 8,200 rooms. In the year to April 2002, the current estate of S&N Retail generated EBITDA of £272 million ($433 million) on turnover of just more than £1 billion ($1.6 billion). The current net book value of the retail business is circa £2.3 billion ($3.7 billion).

In December 2002, S&N confirmed that it intended to release capital from its retail estate through an innovative ‘sale and manage-back’ agreement for part of the estate. In this structure the assets would have been sold outright with a grant back to S&N of a long-term management contract to operate the business on behalf of the new owners. But in a statement the company said: “It has become increasingly apparent that a number of credible and well-funded groups have an interest in investing in managed retail estates, thus stimulating a new phase of consolidation. In these new circumstances, the board believes that the best option to maximise value for the shareholders of S&N is to dispose of the whole business.”

S&N will sell its managed retail business through an auction, managed by S&N’s advisers, Deutsche Bank and UBS Warburg, starting immediately. Completion is targeted before the end of 2003.

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