Deal of the week – Greene king Greene King acquisition leaves Gouldens out in cold

Gouldens has lost one of its longest-standing clients as a result of the Foot-and-Mouth crisis.
The firm is advising on the £102.6m sale of Old English Inns to pub operator and brewer Greene King. Tourism-reliant pub chain Old English went on the market after the Foot-and-Mouth epidemic affected its target earnings.
The sale to Greene King, which should be announced today (17 September), is likely to mean a client loss for Gouldens.
Old English issued two profit warnings this year. Foot-and-Mouth was behind one of them, the other was due to losses suffered by the company during last autumn's fuel crisis. It announced bid talks on 16 August when it was trading at 121.5p a share.
On 7 September, Greene King announced a £102.6m agreed bid for Old English at 150p a share. Greene King will pay £59.1m for Old English's equity and assume debt of £43.5m.
Linklaters & Alliance, Greene King's main advisers, handled the acquisition of Old English. Corporate partners James Crook and Raymond Cohen led the team. The firm has been the brewer's main adviser for decades. It also advised Greene King on its acquisition of the Magic Pub Company in 1996 for £199.5m, and the 1999 purchase of Marston's 165 southern pubs.
According to Greene King company secretary Robert Bellhouse, Old English Inns will now be part of Greene King. “It is unlikely Gouldens will be retained as adviser,” he said. “When there is a takeover we would not be looking to gain another law firm.”
Crook confirmed that the acquisition has put Gouldens out of the picture. “We will be retained as adviser to Greene King. Old English Inns will be integrated so we will do the legal work in relation to the large group. There is no relationship between Greene King and Gouldens,” he said.

“There is no relationship between Greene King and Gouldens”
James Crook, Linklaters & Alliance

Gouldens senior corporate assistant Julian Runnicles handled the day-to-day running of the deal. He admitted that the relationship with Old English was in question, but he is optimistic that Greene King will retain the firm in relation to Old English in the future. “As long term advisers we have an in-depth knowledge of Old English Inns. There's a good chance we will be retained by the parent company for work in relation to Old English, but it is uncertain whether the parent company's adviser will get the work,” Runnicles said.
Bellhouse said that there may still be a role for Gouldens in the transfer period. “The deal was quick and clean,” he said. “However, there will be aspects of work where Gouldens may have a role to play. For example, there may be complications relating to the Old English pension schemes or there could be ongoing litigations. In such circumstances we would benefit from Gouldens' expertise. However, it could also be that these arrangements are so straightforward that we don't need to retain a lawyer that we have no relationship with.”