Punch Gains for Fifth Day as Bank Sells Admiral to Cerberus

Punch Taverns Plc (PUB), the owner of more than 4,500 U.K. pubs, gained for a fifth day in London trading as Cerberus Capital Management LP bought Admiral Taverns Ltd. from Lloyds Banking Group Plc.

Punch shares rose as much as 36 percent, the biggest intraday gain since August 2011, and were up 8.6 percent to 10.75 pence at 4:20 p.m. local time, extending their gain to 45 percent since Morgan Stanley said Dec. 28 it had raised its stake in the Staffordshire, England-based company to 12 percent.

Cerberus paid about 200 million pounds ($320 million) for Admiral’s pub business, according to three people with knowledge of the deal, who asked not to be identified because the terms are private.

Lloyds (LLOY) took a stake in Hitchin, England-based Admiral in November 2009 as part of a financial restructuring in which much of the company’s debt was written off. HBOS Plc, which Lloyds acquired in January 2009, had lent Admiral about 850 million pounds. Admiral operates 1,100 pubs.

Punch started talks with some of its biggest investors and bondholders last year on the possible options available for restructuring its securitization, it said Oct. 24. It sold 475 pubs in the fiscal year ended Aug. 18 and wants to reduce the number of pubs it owns to 3,000.

The five-day share gain is the largest since 2009. The volume of shares traded was more than 9 million, over 13 times the three-month daily average. The current share price is 51 percent above the average 12-month price target of 7.1 pence of seven analysts tracked by Bloomberg.

That price target is equivalent to the value of its 50 percent stake in Matthew Clark, a U.K. drinks wholesaler, according to Douglas Jack, an analyst at Numis Securities Ltd. That implies the restructuring would wipe out any remaining value from the pub business in the equity, Jack said in an interview.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net

To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net

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