EUROPEAN Leisure and Allied Leisure have agreed an all-share merger which would place a value of around €102 million (£80.3 million) on the enlarged group. Under the terms of the deal, European Leisure shareholders would receive 361 new Allied shares for every 100 European shares. This would give them 52 per cent of the enlarged group, with Allied shareholders holding the remaining 48 per cent.

Based on Allied's share price of 27.5p sterling (41 cents) on Wednesday, prior to the announcement, the offer valued European at £35.4 million sterling (€52.8 million), representing a premium of around 45.9 per cent on February 22nd, the day before merger talks were announced.

The new leisure group will have more than 200 venues in Britain, covering a range of activities from snooker and bowling to discotheques, and employ more than 4,000 people. European's shares are quoted on both the Dublin and London exchanges. Allied's shares are quoted in London.

The merger is expected to lead to significant opportunities for cost savings and purchasing benefits within the enlarged group. Savings of at least £1 million sterling per annum are expected from the integration of central costs. "The merger will be an important first step in creating a sizeable leisure group with national presence across a range of leisure activities," said Mr Victor Steel, proposed chairman of the merged group. "The merged group will also have the strength of cash flow and the institutional shareholder base to take advantage of further consolidation in the leisure sector."

Mr Steel is currently chairman of European. Mr Neil Goulden, managing director of Allied, becomes chief executive of the merged group, while Mr Martin Scott, finance director of Allied, will hold that position in the enlarged company.

Mr Ian Rock, chief executive of European, and Mr Patrick Hooper, finance director of European, will resign from the European board on completion of the merger. They will enter into a consultancy agreement with the merged group for a period of six months "to assist in the smooth integration of the two groups", the joint statement said.

Both companies have also announced interim results which show marginal profit growth. European increased its operating profits from continuing operations from £3.19 million sterling (€4.76 million) to £3.31 million (€4.94 million) in the six months ended December 31st, 1998. Allied showed a rise in operating profit from £2.2 million (€3.28 million) to £2.5 million (€3.73 million). European generated a turnover of £33.2 million (€49.55 million), a little above Allied's £28.6 million (€42.69 million).

European's earnings per share amount to 5.1p (7.61 cents), contrasting with a loss of 5.6p (8.36 cents). An interim dividend of 1.4p (2.09 cents) has been declared, representing a 12 per cent increase.

Mr Rock said: "The focus remains on the highly successful Rileys division where like for like sales are currently ahead by 8 per cent since the end of December. We remain confident that this core business will go from strength to strength".