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Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
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Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
We’re now sitting on a 66% return from Ei Group (EIG) after the pubs group agreed a takeover offer of 285p cash per share from Stonegate Pubs, a private operator of 772 pubs and bars. This gain has trounced the 5% return from the FTSE 350 over the same period.
Although the transaction is dependent upon the approval of UK and European competition authorities, the likelihood is that the deal will go through. This means that the company’s shares will be delisted in due course.
The rationale was ‘defensive’ in nature and proposed against a backdrop of a ‘challenging operating environment for the foreseeable future’. Indeed, Stonegate, owned by private equity group TDR Capital, says it will continue to execute EI Group’s existing strategy in order to benefit from the combined company’s greater scale and diversification.
The management said that Stonegate made multiple approaches earlier in the year. These were rejected because the price was not acceptable. Other shares in the sector gained on the takeover news as the price eventually agreed was at a premium valuation to other companies in the sector.
SHARES SAYS: Take profit now. For those wanting to keep exposure to the same industry, we recommend recycling the proceeds into Marstons (MARS) which we wrote about in June.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
The value of your investments can go down as well as up and you may get back less than you originally invested. We don't offer advice, so it's important you understand the risks, if you're unsure please consult a suitably qualified financial adviser. Tax treatment depends on your individual circumstances and rules may change. Past performance is not a guide to future performance and some investments need to be held for the long term.