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(Alliance News) - Mitchells & Butlers PLC said Wednesday its wholly-owned subsidiary, Mitchells & Butlers Retail (No 2) Ltd, reached an agreement with Ego Restaurants Chief Executive James Horler, and the other shareholders of 3Sixty Restaurants Ltd, to vary certain arrangements of a joint venture.
The joint-venture relates to the development of the Ego Restaurants business, which operates 23 Mediterranean-style family restaurants across the UK.
In August 2018, the Mitchells subsidiary acquired from an exiting shareholder a 40% stake in 3Sixty for an initial GBP4 million. At the same time, the subsidiary entered into a joint venture agreement with the other 3Sixty shareholders for the development of the Ego Business.
"The joint venture arrangements involve certain of the company's other subsidiaries leasing sites to 3Sixty, at market rents, for conversion to the Ego Restaurants brand," the pub operator explained.
Currently, 13 sites are leased to 3Sixty through the joint venture arrangements.
The company continued: "Pursuant to certain put and call option arrangements entered into at the time the joint venture arrangements were put in place, the subsidiary could acquire the remaining 60% interest in 3Sixty, the majority shares, from the majority shareholders in August 2021."
In a statement on Wednesday, however, Mitchells & Butlers said it has agreed to extend the joint venture agreements - moving to April 1, 2023.
"The maximum amount payable by the Subsidiary for the majority shares, which is to be calculated by reference to the profitability of the Ego business in the period of 12 months prior to the date of the exercise of the relevant option, will be capped at GBP40 million," Mitchells & Butlers said.
The value of 3Sixty's gross assets at March 31, 2019 was GBP9 million. For the year ended March 31, 2019, 3Sixty made an operating loss of GBP750,000.
Shares in Mitchells & Butlers were 1.0% lower in London on Wednesday morning at 334.50 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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