Revolution Bars surges as it agrees deal with Stonegate

Shares in Revolution Bars surged on Thursday as it agreed to a £101.5m takeover offer by Stonegate Pub Co, which operates Walkabout and Slug and Lettuce bars.

Meanwhile, Deltic, which announced earlier this month that Revolution had rejected its initial suggestion for an all-share merger, said it was currently undertaking due diligence with a view to formalising its possible merger proposal, including an analysis of synergies.

"Deltic will make a further announcement in due course. In the meantime, Deltic emphasises that there can be no certainty that an offer will be made for Revolution nor as to the terms on which any offer may be made."

It noted Stonegate's announcement of a firm intention to make an offer for Revolution on Thursday and said it continues to believe that this offer significantly undervalues Revolution.

Under the terms of Stonegate's offer, Revolution shareholders will be entitled to receive 203p in cash for each of their shares, representing a premium of around 62.4% to the closing price of 125p on 28 July. Revolution said its directors consider the terms to be in the best interests of its shareholders and as such, they intend to unanimously recommend that they vote in the favour of the deal.

Stonegate chairman Ian Payne said: "We are delighted to announce this agreement with Revolution, which is a business we know well and whose leading position in the premium segment of the drinking out market is a highly complementary addition to our existing offering. Our strong reputation and position in the market firmly establishes Stonegate as the natural home for Revolution's brands, and will allow us to enhance further the breadth of offer and occasions we cater for.

"This acquisition is entirely consistent with our stated strategy to capitalise on the town and city centre drink-led opportunity. Stonegate has a successful track record of investing in and growing the businesses which it has acquired. Revolution is a high-quality business with good people and an attractive consumer proposition. We look forward to working together with our new colleagues joining the enlarged Stonegate group to continue to provide a great experience for customers."

Keith Edelman, non-executive chairman of Revolution, said: "We believe that the offer from Stonegate represents an attractive and certain value in cash today for Revolution shareholders, reflecting the high quality of the business, its people, market position and future prospects. The Stonegate proposal provides considerable opportunities for our people and for the business as a whole. Stonegate is an experienced operator in this sector that understands Revolution's ethos with its unique premium bar offering."

At 0850 BST, Revolution shares were up 12.3% to 207.25p.