Pubmaster looks abroad for expansion

The chain is scouting Spain, France and Germany for potential acquisitions to add to its 3,200 pubs.

The Hartlepool firm is locked in a battle for Scottish and Newcastle's (S&N) stable of 1,500 outlets but also has aspirations to expand into foreign markets.

Chairman John Sands said: "We would go tomorrow if we could find the right opportunity."

The pub group has identified two potential targets - one in Germany, one in Spain - but is facing a number of problems.

Mr Sands said: "We do see in the future the opportunity to apply the same business model we have in the UK to international destinations such as Germany, France and Spain.

"The problem is, it is a very fragmented market with no significant opportunities to buy a big group.

"The price aspirations are also different when the British show an interest."

The company employs a full-time member of staff looking to find a foothold in markets abroad.

Closer to home, the group had been buoyed by news it had progressed through to the second round of the bidding war for the S&N pubs and restaurants.

It is now refining its offer in time for Friday's deadline for binding bids.

Industry sources have put the Pubmaster offer at £2.5bn, £200m above the £2.3bn valuation of the chain.

Pubmaster is working with BC Capital Partners, one of the biggest private equity businesses in Europe.

BC is no stranger to the company, having worked as an investor in the original management buyout of Pubmaster in 1996.

If the group successfully acquires S&N's pubs, it will leapfrog rivals Punch Taverns into second place in the pecking order of pub chains.

But it has a real fight on its hands persuading Edinburgh-based S&N to sell to them.

The auction has attracted a range of bidders, including billionaire property investors David and Simon Reuben.

Other interested parties include Mitchells & Butlers and the Laurel Pub Company, which has teamed up with Japanese bank Nomura