Punch Taverns, the quoted pub group, has announced the sale of 869 leased and tenanted pubs to Admiral Taverns for £326m.
The fee for the pubs, which are principally situated in England and Wales, is to be satisfied by £322.5m in cash and £3.5m in preference shares.
The deal, which is expected to complete in mid May, represents Admirals' biggest to date and consolidates its position as the UK's third-largest pub company with around 2,700 pubs.
Gary Landesberg, chief executive of Admiral, said: "This is an excellent acquisition for Admiral. The majority of the pubs are freehold and the estate provides Admiral with further significant scale nationwide and excellent synergies with our existing pub estate.
"These pubs also fit geographically and operationally with our existing estate and will utilise our existing infrastructure."
Punch said that it would use the cash proceeds from the sale to initially reduce net debt.
Giles Thorley, chief executive of Punch Taverns, said: "This is an excellent transaction for Punch and in line with our strategy of continuously improving our high quality pub portfolio.
"We constantly seek opportunities to maximise shareholder value and this disposal represents a strategic sale of non-core pubs which do not fit our aspirations for business growth as we continue to build the UK's premier pubco."
For the financial year ended 19 August 2006, the 869 pubs generated ebitda of £30.1m.
The pubs had a book value of £321m as at 3 March 2007.
They are believed to be smaller drink-led tenancies, which are expected to be hit hardest by the smoking bans in Wales and England.