Whitbread sells pubs to M&B for £497million

Whitbread has this morning announced the sale of 239 pub/restaurants to Mitchells and Butlers for £497million.

The deal, for 235 open pubs and 4 which are not open for trade yet, should be completed by July 28.

Whitbread has said it will initially use the proceeds from the transaction to pay down debt while it reviews its options.

The acquisition represents exceptional value compared with greenfield site developments. ​Tim Clarke, chief executive of M&B.

The pubs it has sold made a profit before allocation of central overhead of £37.5 million in the year ended 1st March 2006.

Alan Parker, Whitbread chief executive said: "We are very pleased that the sale process has been completed so successfully in terms of both value and speed. ​

"We can now focus on operating those sites that combine a pub restaurant with a Premier Travel Inn - a combination that has produced some of the highest returns in the industry.

"We will also be progressing our programme of adding around 3,000 new rooms on our existing pub restaurant sites.

"We see substantial opportunities for further profitable growth from these combined sites."

Tim Clarke, chief executive of M&B said: "With this transaction, we have secured 239 of the best pub restaurant sites in the UK; as defined by their locations, their scale, and above all their sales and profits potential. ​

"The acquisition represents exceptional value compared with greenfield site developments.

"The conversion of these sites to our brands and formats will enable us to create substantial shareholder value from this acquisition and accelerate Mitchells & Butlers' growth.

"Not withstanding this acquisition it is very pleasing to confirm that we are still expecting to return of the order of £500m to shareholders."