Greene King in �30m pubs deal

SUFFOLK-based Greene King has snapped up 11 pubs put up for sale by Punch Taverns, in a deal valued at �30.4million.

SUFFOLK-based Greene King has snapped up 11 pubs put up for sale by Punch Taverns, in a deal valued at �30.4million.

The Bury St Edmunds pubs and brewing company will fund the transaction using proceeds from a recently completed rights issue, through which it sought to raise �207.5million to take advantage of opportunities for acquisitions and debt reduction.

Seven of the pubs - all being acquired freehold and run as managed houses - are in London, including the Bunch of Grapes in Knightsbridge and St Margaret's in Twickenham, while the other four are in Scotland.

Greene King said that, for the financial year ended August 23, 2008, the pubs together generated earnings before interest and tax of �3.55million, with the acquisition expected to be earnings enhancing in the first full year of ownership. The deal is expected to complete on July 1.

Rooney Anand, chief executive of Greene King, said: “I am really pleased we have been able to acquire these high quality assets, further strengthening our presence in two key geographies for us.

“They also match the criteria we set out when announcing our recent rights issue. They will be seamlessly integrated into our retail operations in both England and Scotland and we look forward to operating these pubs successfully over the coming years.”

Most Read

Punch, the UK's largest pub operator, said the net proceeds from the disposal would be used to reduce debt and reinvest in its estate. As of March 7 this year, the pubs had a book value of �32.7 million.

Giles Thorley, chief executive of Punch: “This transaction is in line with our stated strategy of increasing free cash flow and reducing the overall level of our debt, whilst seeking to maintain investment in our high-quality pub estate.”

Greene King is the latest brewer to take advantage of Punch's decision to sell off some of its best performing pubs in order to reduce its borrowings.

In March, Southwold-based Adnams acquired three popular waterside pubs from Punch - the Maybush at Waldringfield, the Butt & Oyster at Pin Mill and the Ship at Levington - for around �2.7million.

London brewer Fuller's has acquired six pubs in the capital from Punch subsidiary Spirit - including the Red Lion, a favourite among MPs at Westminster - for �21.1million while Kent-based Shepherd Neame has paid �14.9million for 13 Punch inns around Greater London and Surrey.