Greene King has agreed a £654 million deal to acquire Laurel Pub Company's community pub operation.
The addition of the 432-strong Laurel neigbourhood business takes Greene King's estate to more than 2,100 pubs. The Suffolk brewer saw off competition including rival 'super-regional' Wolverhampton & Dudley, as well as Punch and Spirit, to top the list of bidders.
Greene King said the deal will be 'significantly' earnings enhancing in the first year, and plans to fund the acquisition entirely through new bank borrowing. The return on investment is expected to more that compensate for the increased borrowing costs in the first year of ownership.
Most of the pubs, about 84 per cent, are freehold, and generated turnover of £235.4 million in the year to the end of February. Greene King plans to unravel the sale and leaseback deal for some of the pubs agreed between Laurel and property company London & Regional last year. There are also plans to move around 150 pubs in the enlarged Greene King estate from management to tenancy. Greene King chief executive Tim Bridge said: "We believe that we will be able to generate significant synergies from the enlarged estate through our integrated business model, thereby creating further shareholder value."
The sale will leave Laurel with 177 town centre outlets including the Hog's Head chain.
Laurel chief executive, Ian Payne said: "I believe that the cultural, geographical and operational fit between the two estates will enable the enlarged entity to take advantage of numerous growth opportunities."