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Irish forecourt operator Applegreen (APGN) has bought a majority stake in service station group Welcome Break for €361.8m in a deal that constitutes a reverse takeover.

Applegreen has struck a deal with NIBC European Infrastructure Fund to buy its 55.02% holding of Welcome Break via investment in Appia Group Ltd for a cash sum of €361.8m.

In addition, the group has entered into a separate conditional agreement with Welcome Break Investors II, an LLP managed by Arjun Infrastructure Partners, which holds approximately 45% of Welcome Break.

Applegreen said the reverse takeover represented a “transformational acquisition in the UK of a long established, well invested and cash generative business, Welcome Break”

The deal will significantly broaden its motorway service area network and fulfils a strategic objective since its IPO of achieving critical mass in the “large and stable UK market” while deepening its exposure to no-fuel food and beverage sales.

The deal will be underwritten by a new debt facility of €300m and standby equity financing is in place to raise a further minimum of €100m.

Under the terms of the AIP Agreement, Applegreen will be responsible for Welcome Break’s strategy and operational matters and will share general governance rights with AIP including equal board representation.

Applegreen will sell to AIP an 8.6% stake in Welcome Break for €56.5m and will transfer its UK MSA and TRSA assets as well as its UK development pipeline assets to Welcome Break in exchange for the issuance of a further £120m of equity in Welcome Break to the company. That will reduced its stake to 50.01% of the group.

Welcome Break has a portfolio of 24 motorway service areas, two trunk road service areas and 29 hotels across 35 locations in the United Kingdom. Its sites attract 85m motorway customers per annum.

Formed in 1959, Welcome Break has over 5,000 employees operating food and retail brands such as Starbucks, KFC, Burger King, Subway, Waitrose, Harry Ramsden’s and WH Smith. Welcome Break also operates 22 Days Inn and seven Ramada hotels across the UK motorway network.

Welcome Break generated revenues of £723.4m and Adjusted EBITDA of £66.4m in the year to January 2018.

Applegreen said there was significant opportunity to enhance performance of the enlarged group through operational efficiencies and synergies achieved through combining Welcome Break and Applegreen support functions.

Bob Etchingham, CEO of Applegreen said: “Welcome Break is a fantastic business, it has led the way in providing the very best food and beverage facilities on the UK motorways. We were attracted to Welcome Break because of the strength of its franchise, the excellent management team and the committed staff at each of its 35 locations. We look forward to continuing to grow the Welcome Break business and to offering the 85 million customers who visit Welcome Break each year the very best experience on UK motorways.”

Darren Kyte, MD of NIBC Infrastructure Partners and chairman of Welcome Break Group said: “This is a transformational transaction in the UK MSA sector, and I am sure that the combination of the Applegreen Service Area operations in the UK with those of Welcome Break, and combined management capabilities will help build further upon the consistent and strong earnings growth seen by both businesses over the past decade.”

Trading in Applegreen shares have been suspended the UK and Ireland due to the reverse takeover nature of the transaction. The shares will remain suspended until an admission document for the enlarged group is published in September.

Morning update

AB InBev has launched an accelerator fund for startups and entrepreneurs looking to tackle global sustainability issues.

Successful applicants will be announced in September during the UN’s climate week. They will then be given mentorship from InBev’s incubator and venture capital team ZX Ventures, up to $100,000 (£76k) in funding, and “access to new networks”.

Click here to read the full story.

On the markets this morning, the FTSE 100 has fallen a further 0.5% to 7,613pts as the market awaits the Bank of England’s interest rate decision later this morning - widely tipped to rise the UK base rate by 0.25% to 0.75%.

Modest early risers include Tate & Lyle (TATE), up 0.6% to 630.2p, Greggs (GRG), up 0.4% to 1,035p and Imperial Brands (IMB), up 0.4% to 2,900.1p.

Fallers include Greene King (GNK), down 4.8% to 485.5p, Stock Spirits (STCK), down 2.8% to 210p, Marston’s (MARS), down 1.5% to 402.8p. Science in Sport (SIS), down 1.1% to 71.2p and FeverTree (FEVR), down 0.9% to 3,538.6p.

Yesterday in the City

The FTSE 100 slid 1.2% yesterday to 7,652.9pts driven by weakness in the mining sector, but also a 7.1% share price plunge for clothing bellwether Next (NXT) on weak in-store sales in the second quarter.

Irn Bru and Rubicon manufacturer AG Barr (BAG) was up 0.6% to 681p after recording a 5% increase in sales for the first half of 2018, buoyed by favourable hot weather at the end of the period.

Risers yesterday included Glanbia (GLB), up 6.3% to €14.93, Fever-Tree (FEVR), up 3.7% to 3,572p, Majestic WINE (WINE), up 2.7% to 460p, Hilton Food Group (HFG), up 2.5% to 980p, Kerry Group (KYGA), up 1.7% to €92.50, Devro (DVO), up 1.5% to 19.8p and Hotel Chocolat (HOTC), up 1.5% to 345p.

The sector’s FTSE 100 companies had a tough day, with Marks & Spencer (MKS) dragged down by the poor in-store performance at Next, falling 3.2% to 298.2p.

Other fallers included Associated British Food (ABF), down 1.5% to 2,418p, Imperial Brands (IMB), down 1.1% to 2,889.5p and Tesco (TSCO), down 1% to 257.8p.

Greggs fell 2.2% to 1,031p after issuing first half trading numbers on Tuesday.

Other fallers included Mcbride (MCB), down 4.4% to 135.2p, Just Eat (JE), down 2.3% to 775p and Marston’s (MARS), down 1.1% to 93.6p.