SFI buys Parisa café bars for £15m

SFI plans to double its Slug & Lettuce chain of high-street pubs to 60 units after yesterday agreeing to buy the Parisa café bars chain for up to £15m.

SFI plans to double its Slug & Lettuce chain of high-street pubs to 60 units after yesterday agreeing to buy the Parisa café bars chain for up to £15m.

Analysts said the deal was much cheaper than expected and that it highlighted the pressure faced by Wolverhampton & Dudley Breweries regarding the overdue disposal of its Pitcher & Piano chain.

SFI, which also owns the Bar Med and Litten Tree chain, beat Parisa's founder Nader Haghighi to the purchase from CVC Capital Partners and Bridgepoint Capital. The pubs group will pay the venture capitalists an initial £8m for the 28 outlets and the remainder in deferred payments over the next two years. It plans to convert most of the sites into its food-led Slug & Lettuce venues at a cost of £50,000 to £100,000 per site.

Tony Hill, the chief executive, said the deal would put Slug & Lettuce head to head with rival Bass's 53 All Bar One units. He sees scope to develop 100-120 Slug & Lettuce sites across Britain over the next four years.

With a glut of pubs currently for sale, sellers are being squeezed. Analysts said that this would make it harder for Wolves, the regional brewer that fought off a hostile takeover from Pubmaster earlier this year, to offload its Pitcher & Piano chain.

Two buyers – Regent Inns and SFI – have walked away, refusing to pay Wolves' £65m asking price, which could leave the brewer of Banks's ale struggling to find the £100m it needs by Christmas for the first stage of two share buybacks. Pitcher & Piano could fetch as little as £40m, analysts said.

To fund the Parisa acquisition, SFI reduced new openings by eight sites, saving it £10m. Analysts expect the deal to add around £3m a year to SFI's profits while helping it decrease its operational gearing. SFI shares gained 8 per cent to 203.5p.