Response to Tender Offer

RNS Number:7606O
Eldridge Pope & Co PLC
18 August 2003


Eldridge, Pope & Co., p.l.c.


                            Response to Tender Offer



The Board of Eldrigde Pope has today written to Shareholders with regard to the
Tender Offer announced by PricewaterhouseCoopers on behalf of SDA Limited on 7
August 2003.



Set out below is the full text of that letter.



"Dear Shareholder,



Do not accept the Tender Offer by SDA



I am writing to explain why the Board recommends that Shareholders should take
no action in respect of the Tender Offer.



On 7 August 2003, PricewaterhouseCoopers on behalf of SDA, a company which is
ultimately wholly owned by Michael Cannon, announced an unsolicited Tender Offer
to acquire up to 19.31 per cent. of the Ordinary Shares of Eldridge Pope. If the
Tender Offer is fully successful Michael Cannon and SDA will in aggregate
control 29.99 per cent. of the Ordinary Shares in your Company, the maximum
shareholding allowable under the Takeover Code without making an offer for the
whole of the issued share capital of the Company.  The Board believes that the
Tender Offer is an opportunistic attempt to secure significant influence over
the Company without paying an appropriate control premium and without offering a
full exit to all Shareholders.



Since the Tender Offer was announced, the Board has sought clarification from
Michael Cannon as to his intentions with regard to his shareholding in Eldridge
Pope. However, Michael Cannon has declined to provide any guidance on his future
intentions and he has not explained his reasons for taking this course of
action. The Board believes that the creation of a potentially influential
shareholder whose long term intentions are unclear is not in the best interests
of Shareholders.



Why you should not accept the Tender Offer



The Board has serious concerns over the implications for your Company should
Michael Cannon be successful in his Tender Offer and gain an influential
shareholding in your Company.



*    The announcement of the Tender Offer and the document sent to Shareholders
give no indication as to Michael Cannon's intentions with regard to Eldridge
Pope. Despite your Board's attempt to seek clarification on this issue in order
to provide appropriate guidance to Shareholders, Michael Cannon has declined to
provide any information on his future plans.



*    If the Tender Offer is fully successful, Michael Cannon may use his
shareholding to exert significant influence over the future actions of the
Company, for example by blocking shareholder resolutions requiring 75 per cent.
approval.



*    Michael Cannon would also be in a position to influence and potentially to
frustrate any future offer for the Company.



*    The Tender Offer and accompanying press commentary has distracted the focus
of the new senior management team during a key trading period for the Company.
The new senior management team has recently seen the benefits of raised morale
and improved levels of motivation. The uncertainty at Eldridge Pope generated by
further press speculation is damaging to such progress.



*    If Michael Cannon wishes to exert significant influence over the Company
the Board believes a full offer to all Shareholders should be made at an
appropriate price.



In addition, the Board believes that the Tender Offer undervalues the Company's
pub assets and its long term prospects and is an opportunistic attempt to
acquire a significant shareholding without paying an appropriate premium.



*    The Tender Offer price of 165 pence per Ordinary Share represents a premium
of only 6.8 per cent. over the mid-market price of 154.5 pence per Eldridge Pope
Ordinary Share at close of business on 6 August 2003, the last day prior to the
announcement of the Tender Offer, and is at a discount to the mid-market price
of 167.5 pence per Ordinary Share at close of business on 15 August 2003, the
latest practicable date prior to this letter.



*    Michael Cannon has taken the opportunity of launching a Tender Offer at a
time when Eldridge Pope's share price has suffered from recent trading
underperformance. On 26 June 2003 the Board announced a new senior management
team and a recovery plan designed to restore trading performance and release
additional value for the benefit of all Shareholders. To the extent that
Shareholders accept the Tender Offer they will not be able to participate in a
potential recovery.



*    The Board believes that Michael Cannon is seeking to obtain influence over
the Company without providing a full exit to all Shareholders.



Update on strategy



Notwithstanding the disruptive effects of the Tender Offer, the Board is
focussed on its "back to basics" operational and financial recovery plan as
announced with the interim results on 26 June 2003.  This followed a period of
merger discussions, during which the Board fully explored whether it would be in
the best interests of Shareholders and the business to be part of a larger
group.



As announced on 26 June 2003, these discussions did not, in the opinion of the
Board, result in an offer for the Company that adequately reflected the inherent
value of its pub portfolio and the longer term recovery prospects of the
business.



The "back to basics" plan has the following key features:



*    Debt reduction through the disposal of selected properties and curtailed
investment



*    Reduced exposure to the leasehold market



*    Reduction in direct overheads, with a flatter management structure



*    Simplified business with a clearer focus on effective pub retailing skills



*    Emphasis on local solutions for local markets



Progress has already been made implementing this strategy:



*    The Company is in discussions with parties regarding the disposal of 29
sites, the majority of which are leasehold. The Board anticipates that the
majority of these disposals will exchange by the end of the financial year.
Taken in aggregate, these sites generated operating losses of approximately
#690,000 in the 10 months to July 2003.



*    Progress has also been made in reducing head office overhead costs to
create a flatter management structure.



*    The Board remains confident that the execution of the "back to basics" plan
is the best available option for the enhancement of longer term Shareholder
value through the restoration of profitability across the pub portfolio and the
reduction of debt. The Board remains committed to realising the underlying value
of the Company's pub portfolio for the benefit of all Shareholders.



Current trading and prospects



The Board believes that the "back to basics" strategy is beginning to galvanise
a recovery, particularly at the Group's Inns and Pubs divisions which posted
like-for-like sales performances of +0.4 per cent. and -3.5 per cent.
respectively, in the 17 weeks of the second half to 2 August, up from -6.3 per
cent. and -9.9 per cent. respectively, in the first half.



Trading in the Bars division, which includes Toad, continues to be tough as
customers tend to shun town centre venues in the hot weather. Consequently, for
the Group as a whole, like-for-like sales performance in the 17 weeks of the
second half to 2 August shows a 5.3 per cent. decline compared to a 9.6 per
cent. decline in the first half.



Once underperforming sites have been turned around or sold, overheads reduced
and operational disciplines tightened, the Board believes that the Company will
be well positioned to benefit from increased levels of profitability and
operating cash generation in the next financial year and beyond.



The Company continues to enjoy strong asset-backing with net asset value per
share as at 5 April 2003 of 255 pence per share.  In the first half of the
current financial year net debt was reduced by #8.0 million to #44.8 million,
the Directors believe that net debt will show a further reduction by the end of
the current financial year.



Recommendation



Your Board believes that the Tender Offer undervalues your Company and is an
opportunistic attempt to obtain significant influence over your Company without
paying an appropriate premium.



Your Board has received financial advice from Dresdner Kleinwort Wasserstein
and, in giving that financial advice, Dresdner Kleinwort Wasserstein has placed
reliance on the Directors' commercial assessments.



Your Board considers that the Tender Offer is not in the best interests of
Shareholders as a whole and unanimously recommends that Shareholders take no
action and do not accept the Tender Offer.  The Directors and their immediate
family will therefore not be accepting the Tender Offer in respect of any of
their holdings."



Enquires:



Susan Barratt

Eldridge Pope

Tel:  [phone]



Michael Holmes/Daniel de Belder

The Communications Group plc

Tel:  [phone]



The Directors of Eldridge, Pope & Co., p.l.c. accept responsibility for the
information contained in this announcement.  To the best of the knowledge and
belief of the Directors of Eldridge, Pope & Co., p.l.c. (who have taken all
reasonable care to ensure that such is the case), the information contained in
this document is in accordance with the facts and does not omit anything likely
to affect the import of such information.



Dresdner Kleinwort Wasserstein, which is authorised and regulated by The
Financial Services Authority, is acting for Eldridge Pope and no-one else in
connection with the Tender Offer and will not be responsible to anyone other
than Eldridge Pope for providing the protections afforded to clients of Dresdner
Kleinwort Wasserstein, or for providing advice in relation to the Tender Offer.



                                  Definitions


"Board" or "the Directors"                           the directors of Eldridge Pope

"Eldridge Pope" or "the Company"                     Eldridge, Pope & Co., p.l.c.

"Dresdner Kleinwort Wasserstein"                     Dresdner Kleinwort Wasserstein Limited

"Ordinary Shares"                                    issued ordinary shares of 50 pence each of Eldridge
                                                     Pope

"SDA"                                                SDA Limited

"Shareholders"                                       holders of Ordinary Shares of 50 pence in Eldridge
                                                     Pope

"Takeover Code"                                      the City Code on Takeovers and Mergers

"Tender Offer"                                       the tender offer by PricewaterhouseCoopers on behalf
                                                     of SDA to acquire up to an aggregate of 4,779,432
                                                     Ordinary Shares at 165 pence per Ordinary Share





                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

RSPNKFKKABKKBFD