Mon 16th Oct 2017 - Stonegate ‘considers its options’ as Revolution shareholders deal blow to £101.5m takeover bid Stonegate ‘considers its options’ as Revolution shareholders deal blow to £101.5m takeover bid: Stonegate Pub Company has said it is “considering its options” after Revolution Bars Group shareholders dealt a blow to its £101.5m takeover bid. Just 54.72% of proxy votes by Revolution shareholders were in favour of the 203p per share cash offer. With proxy votes representing 52.36% of total outstanding shareholder votes, this means 23.36% of voters so far have voted against the bid. Only 28.16% of total votes cast have been in favour. When Stonegate made its original 203 pence per share cash offer for Revolution in August, it required at least 75% of all shareholders to vote in favour of the deal. In order to achieve this it would require almost all remaining votes to be in favour of the deal. Stonegate said: “Stonegate notes the announcement by Revolution on 16 October 2017 regarding the proxy levels for the scheme. Stonegate is considering its options and a further announcement regarding Stonegate’s intentions will be released in due course.” Stonegate is now expected to either withdraw or increase its offer. When Stonegate originally declared its bid it stated it already had 20.94% provisional shareholder approval derived from the 4.17% holding of Castlefield Funds Partners and the 14.77% holding of Artemis Investment Management. However, earlier this month Artemis withdrew its support for Stonegate’s offer as it no longer believed this adequately reflected the value of the company “as a standalone business or as part of a larger group”. Stonegate’s offer faced competition from Deltic Group, which tabled a merger proposal but it was withdrawn after “engagement with Revolution directors was still not forthcoming”. Analysts previously said Deltic Group’s proposal was worth more at 314p per share than the Stonegate offer. Peel Hunt leisure analyst Douglas Jack said: “At 203p per share (Stonegate’s offer price), we estimate a merged Deltic-Revolution would be valued at just 4.6 times Ebitda or a 15.4% equity free cash flow yield. A 10% equity free cash flow yield would equate to 314p per share for a business that comprises Deltic, which has grown Ebitda by 82% over the past four years, and Revolution, which has growth Ebitda by 38% over the past four years. With such strong growth and returns, there is a case for equity offers being as attractive as cash offers, yet the board and its advisors are still recommending a 203p offer over a 314p offer. They still only have their own 4% of the shares as irrevocable acceptances, and Artemis, the largest shareholder (with 14% of the company), has withdrawn its support for the 203p offer. Like Artemis, other shareholders now have a chance to provide the board and its advisors with some advice, and we believe that advice should include aspiring to something greater than 203p per share.” Shares in Revolution were 4.2% lower at 189p on Monday (16 October).