Punch Taverns plc, the operator of over 8,200 pubs throughout the UK, today announces the proposed acquisition of Spirit Group, bringing the Group total to over 9,500.

Highlights

• Acquisition values Spirit Group (“Spirit”) in aggregate at approximately £2,679 million, (including the assumption of approximately £1,250 million of debt)
  
• Spirit is one of the UK’s leading managed pub companies with an estate of 1,832 predominantly community pubs located across Great Britain
  
• The Directors believe that:
  
  • Within the Spirit estate there are a large number of pubs, which would be better run on Punch’s successful leased and tenanted model
  • The acquisition is in line with Punch’s strategy to further increase the overall quality of its estate
  • This represents an investment in one of the finest pub portfolios in the UK, with further opportunities to enhance value
    
• Acquisition will increase direct access to areas of retail growth such as food, wines and soft drinks and provide potential for  further buying benefits
  
• Acquisition funded by:
  
  • £1,250 million debt facilities
  • £1,250 million of assumed Spirit debenture
  • £275 million of convertible bonds
  • Up to £75 million of new ordinary shares
    
• Significant earnings enhancement in the current financial year (pre exceptional items)
  
• Generation of returns in excess of Punch’s weighted average cost of capital in the first full year of ownership
  
• Intention is to convert c.750 pubs to a leased/tenanted format within two years and initially sell 82 other pubs for alternative use.  A detailed performance review will be undertaken to assess the best method of realising value from the rest of the portfolio
  
• Sale of 203 pubs from the Punch estate to Admiral Taverns for £40 million also announced today (see separate announcement)

The Acquisition is conditional upon the approval of Punch Shareholders. A Circular providing further details of the Acquisition and convening an Extraordinary General Meeting will be posted to Shareholders shortly.

Giles Thorley, Chief Executive of Punch, commented

“This is an exceptional deal for Punch. The proposed acquisition of Spirit will further increase the scale and quality of our estate. The acquisition also provides shareholders with a strongly enhanced earnings profile, returns in excess of cost of capital and excellent growth potential.”

1 December 2005

Punch will be hosting a presentation for analysts today at 10.00am at the offices of College Hill, 4th Floor, 78 Cannon Street, London EC4N 6HH. Please call Jamie Ramsay at College Hill on 020 7457 2048 for further details.

There will be a dial-in facility to access the analyst meeting.   Participants should dial 020 7784 1014 and request the Punch Taverns conference call.

Enquiries:

Punch Taverns plc	Today: 020 7457 2020
Giles Thorley, Chief Executive	Thereafter: 020 7868 8903
Robert McDonald, Finance Director
Financial Adviser to Punch
Morgan Stanley	020 7425 5555
Brian Magnus	020 7425 9446
Henry Stewart	020 7425 3431
Advisers on Placing and Convertible
Morgan Stanley	020 7425 5555
Tim Pratelli	020 7677 4053
Shyam Parekh	020 7677 7902
Citigroup	020 7986 4000
Darrell Uden	020 7986 0410
Chris Zeal	020 7986 0518
College Hill	020 7457 2020
Justine Warren
Matthew Smallwood

Click here for the full press release and presesentaton in pdf format.

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