Allied Leisure ups European bid

ALLIED LEISURE, the Megabowl and Burger King operator, yesterday raised its agreed all-share bid for European Leisure by 17 per cent - to the equivalent of 97.5p a share - in an attempt to deal a knockout blow to the hostile offer from its smaller rival, Waterfall Holdings, which last month trumped its initial agreed offer.

Waterfall is offering 203.5 shares for every 100 Allied Leisure shares, which is worth around 113p a share, but Allied is banking on the European board's strong preference for a deal with Allied and the apparent lack of appetite on the part of European's shareholders for Waterfall shares. Allied's shares were unchanged at 23p yesterday and European Leisure rose just 0.5p to 91.5p. Waterfall shares were down 0.5p to 55.5p.

Allied's offer is increased from 361 to 424 shares for every 100 European Leisure and values European at pounds 35m. Allied's managing director Neil Goulden said yesterday "we have spent far too much money already mudslinging with Waterfall".

If the new bid is successful, the merged company said it intends to sell European's 24 per cent stake in Waterfall and European's 52 night clubs, including the Hippodrome in Leicester Square, London, to concentrate on building up Riley's, European's expanding snooker and pool-room chain.

European has 80 Riley outlets and is opening new sites at a rate of one every three weeks. Allied would increase the growth rate as well as converting space in Allied's Megabowl sites into new Riley clubs.

Earlier this week, Allied and its financial backer Duke Street Capital outlined plans to buy the ten-pin bowling business of First Leisure, the second biggest player in the bowling business. Allied's 29 Megabowl outlets already make it the brand leader.

Allied Leisure also plans to approach Diageo, the owners of the Burger King brand, in an attempt either to build its franchises up to around 100 outlets or exit the business altogether. The existing 35 franchises, mainly in Yorkshire and the east Midlands, could be worth around pounds 20m, analysts said.