Honeycombe Leisure

The Dusanj brothers, who turned around the fortunes of Liverpool brewer Cains, are poised to take control of AIM-listed pub operator Honeycombe in a reverse takeover.

With irrevocable agreements over 52% of the shares, the brothers, whose business partnership began in the chip shop trade, are confident a forthcoming EGM will see Cains reverse into debt-laden Honeycombe, with the Dusanjes then owning 57.65% of the group. Chairman Sandy Anderson will resign from the board and loosen his firm grip on the shares.

The Chatham-born brothers have transformed 157 year-old Cains, bought for £3.4m in 2002, from losses of £2m a year to a £386,000 operating profit last year on £24m turnover. The majority of sales presently come from an impressive canning operation, used by brewers such as Guinness and Brains, with the brewing arm concocting less than 20%.

Cains’ greater financial stability, plus £2.5m of loan stock that the brothers are personally injecting into the new business, will see Honeycombe receive improved banking facilities for its £32m of debt.

Older brother Sudhargara Dusanj said there are three other key strategic elements behind the deal. First, integration of the two head offices at Cains’ current HQ at the brewery in Liverpool and then, Cains’ eight beers will be sold into all of Honeycombe’s 92 owned and eight managed pubs – ‘improving margins as well as enlarging our footprint and strengthening the brand’. Thirdly, all distribution will be routed via Cains’ in-house facility, ‘bringing cost savings and better inventory control’. After all this, he said, ‘we’ll put our heads down – there’s a lot of work to be done’.

Shareholders in Honeycombe, which lost £13.5m on sales of £41.56m last year, should accept the offer, as the determined Dusanjes have a proven management history and the strategy looks reasonable. In this tough environment, outsiders might keep track of the shares for signs that the union is proving its fruitfulness.