1st May 2014 09:25
LONDON (Alliance News) - British brewer and restaurant owner Greene King PLC Thursday said it has agreed the sale of 275 of its UK-based non-core tenanted and leased pubs to Hawthorn Leisure Ltd in a deal worth GBP75.6 million.
The company said the pubs generated earnings before interest, taxation, depreciation and amortisation of GBP12.4 million last year. The book value of these pubs was GBP93.8 million, the firm said. The deal is expected to be completed by early June.
FTSE 250-listed Greene King said it agreed with Hawthorn a three-year beer supply deal for the pubs.
It said the transaction will help increase the weighting of its business toward its faster-growing retail segment and will improve the quality and outlook of its Pub Partners' earnings.
The company's Pub Partners tenanted and leased pub estate division currently owns more than 1,000 pubs across the UK, ranging from traditional country pubs to trendy city centre bars. Four years ago, the firm said it planned to reduce this to 1,200 sites. The company said Thursday it now expects to reduce the Pub Partners estate to around 750 sites.
"We believe that a smaller estate than originally envisaged is now more appropriate going forward as we move increasingly to higher growth areas in our markets and to improve the customer offer," Chief Executive Rooney Anand said in a statement.
Anand said the retained pub partners estates represents a high quality, cash generative business.
"It is a sign of the strength of the business and our balance sheet that we have several options for the funds raised through this sale. Depending on site availability and attractive valuations, our first priority will be to seek to further accelerate our retail expansion plans," Anand said.
Greene King's retail business includes restaurant brands Hungry Horse, Old English Inns, Loch Fyne Seafood & Grill and Eating Inn.
The firm said it could, however, use the funds to reduce its overall longer-term gearing position in the absence of increased investment opportunities.
The sale comes after Greene King Wednesday said it expects to meet market expectations for the full year, supported by good like-for-like sales growth in both its retail and brewing businesses.
In a pre-close trading statement, ahead of its full results on July 3 for its 53 week trading period, Greene King said that retail sales are up 4.1% on a like-for-like basis for the 52 weeks to April 27, and up 4.8% in the last 16 weeks, boosted by events such as Valentine's Day, Mothering Sunday and Easter, as more customers ate and drank at its pubs and restaurants.
The stock was trading at 892.00 pence Thursday morning, up 1.50 pence or 0.2%.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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