TROUBLED Dorset pubs operator Eldridge Pope has backed a £42.3 million takeover by entrepreneur Michael Cannon after no sign of an upturn in trading.

Shares rose five per cent as Eldridge Pope directors recommended Mr Cannon's offer of 171p a share, made through his EP Investments bid vehicle.

Mr Cannon, who has been involved in the pubs sector for 30 years, said the takeover was based on a similar strategy to his deals for the Chef & Brewer chain and Oxford-based brewer Morrells, which were later sold at a profit.

Around £14 million of investment will be ploughed into the 151-strong estate of Eldridge Pope pubs over the next three years to raise performance, which has suffered from intense competition and disappointing food sales.

Dorchester-based Eldridge Pope said there had been "no material change" in the sales trend since May when like-for-like sales at its managed estate were down 5.3 per cent and profits were forecast to miss market hopes.

The fall came despite the launch of a "back to basics" approach, which included job cuts, the sale of 24 underperforming pubs for £5.8 million and the disposal of the Dorchester brewery site, currently the subject of a plan to build up to 550 homes.

Mr Cannon launched a tender offer in August last year for a 29 per cent stake in Eldridge - just short of the threshold that would spark a mandatory offer for the remaining shares.

That offer failed to sway shareholders but yesterday's deal has the blessing of the founding Pope family, which owns 30 per cent of the group.

Eldridge Pope, which was founded in 1837, operates 82 pubs, 36 inns and 33 bars mainly in the South and South West.

Mr Cannon was previously chairman of JA Devenish when the group successfully fended off a £122.3 million hostile takover offer from Boddington in 1991.

Devenish was sold two years later to Greenalls for £202.7 million.

In 1994, Mr Cannon acquired 282 Chef & Brewer pubs for £75.5 million from Scottish & Newcastle. These were incorporated into the Magic Pub Company which was sold to Greene King for £198 million in 1996.

Regional brewer Morrells was his next target, acquiring the business for £48 million in 1998 and selling it to Greene King for £67 million four years later.

In addition to his interests in the pubs sector, Mr Cannon also owns the 200-strong chain of Fuddruckers hamburger restaurants in the United States.

First published: Sept 17