Beleaguered student bar operator Eclectic Bar (BAR:AIM) is buying Brighton Pier for £18 million in an acquisition it says will be immediately earnings enhancing.
The group’s shares have been temporarily suspended from trading pending the publication of an admission document.
The acquisition of The Brighton Marine Palace & Pier Company, which owns and operates the famous seafront visitor attraction, is being funded via an £8.5 million placing and £13 million debt facility. Eclectic’s chairman Luke Johnson, the former Pizza Express boss, is to invest a further £2.5 million.
Eclectic is paying 5.1 times EBITDA (earnings before interest, tax, depreciation and amortisation) for the pier, which is Britain’s most popular attraction outside London with over 10 million visitors a year.
Eclectic has suffered in recent years amid a decline in drinking among its core student customer base. Sales fell by 11.6% in the six months to 31 December 2015.
The acquisition broadens its business base and diversifies its portfolio of venues.
Chief executive Reuben Harley is leaving the company, while Brighton Pier general manager Anne Martin is expected to join the board once the deal completes.
Whether this represents a savvy deal or a desperate, fling money at the problem and hope it gets better move, only time will tell.
