Mitchells & Butlers (M&B) is to swap 21 of its hotels for 44 pub restaurants.
The deal is a straight asset swap involving no cash - with both sides assets valued at around £78m.
The M&B hotels are under the Express by Holiday Inn brand while the Whitbread stand alone pub restaurants are under the Beefeater and Brewers Fayre banners where it did not have permission to build a Premier Inn. M&B also acquired 239 pubs from Whitbread in 2006.
The deal is expected to be completed on 19 September and M&B said it will consider a sale and leaseback of the acquired freehold properties to reduce group debt levels.
M&B said it would also continue to seek value from other non-core assets such as its Innkeeper's Lodge units.
"This deal drives further consolidation in top end managed houses and demonstrates our ability to create value from the non-core assets," said chief executive Tim Clarke.
"Our brands can add a lot of value to these pub restaurant sites as we have shown with previous acquisitions."
Whitbread will convert the hotels to its Premier Inns brand and has planning permission to extend five of the hotels to add a further 200 rooms.
The 400 existing hotel employees will transfer to Whitbread and the 1,300 pub staff will transfer to M&B.
Whitbread chief executive Alan Parker said: "There is a clear and compelling logic to this transaction. Acquiring this well located, modern hotel estate will enable us to re-brand quickly, drive occupancy, increase profits and extend the number of rooms at these hotels by at least 20%.
"We are exchanging these pub restaurant sites because we have been unable to develop a Premier Inn alongside, which was the reason for retaining them."