Britain’s top pub operator prepares for £1 billion sale of more than 1,000 sites
StoneGate Group, the owner of slug & lettuce and some of the chains, has opened initial talks with advisers about the disposal of part of its legacy, according to industry sources.
The move comes as the company is struggling with more than 3 billion in debt, having taken on its rival’s $3 billion of Ei in 2019.
The reviewed pubs – 1,034 sites not known internally as the “Platinum” collection of Stonegate – are considered to be among the company’s strongest assets. Sources said the package could fetch up to $1 billion. Stonegate tried to load the same number of pubs in 2023, but sales did not improve.
After that failed process, Stonegate acquired Platinum Estate using the Platinum loan using the Apollo Equity Equity Equity loan, to push the Pubs to EXPRITE which is different from the wider group.
The company’s managers are evaluating the options before January, when the non-call period on the Apollo loan – which prevents the stoners from being able to sell or reduce the pubs – ends. One option that is considered is to break the property into several large tranches rather than looking for a single buyer.
StoneGate, owned by FitCity Equity Firm TdT, has grown rapidly since its creation in 2010, when TDR bought 333 companies from Mitchells & Burners. Its takeover of EI made it the country’s largest publirder, it unseated Greene King, but it also comforted a highly indebted business just before the covid pandemic forced pubs to close for months.
The financial model has only gotten stronger since then. High loan rates and rising operating costs weighed heavily on the business: Stonegate’s financial costs hit £455 million in the year to 29 September 2024, while the group reported a loss of $214 million a year. The sector has also been hit by high labor costs following an increase in employers’ national insurance and minimum wages.
In August, the ratings of the agency Fitch fell to CCC +, a worrying concern about its ability to meet debt payments. Platinum composites are not included in the estimate.
The platinum estate is understood to generate approximately $90 million in annual EBITDA. All pubs are free, spread across England and Wales.
Private equity investors are expected to show strong interest given the scale and quality of assets available.
Alongside efforts to stabilize its finances, Stonegate chief executive David McDowall — who joined from BrewDog last year — has launched a transformation plan aimed at returning the company to profitability. The strategy involves converting many owned pubs into leased or rented sites, reducing staff exposure and generating company revenue per pub.
TDR, the owner of Stonegate, is best known for its investment in ASDA, which was found to be related to the £6.8 billion belonging to the ISSA brothers last year after buying Zuber Issa’s stake.
Stonegate declined to comment on the potential sale.
