Greene King buys more pubs from Punch

11th Jun 2010 07:16

Bury St. Edmund's based brewer and pubs group Greene King has bought four freehold pub restaurants from cash constrained competitor Punch Taverns.Greene King is paying £5.3m for the pubs which are located in "highly attractive, food-led, destination sites in Aberdeen, Northampton and Nottingham."In the year to August 2009 the pubs generated earnings before interest, tax, depreciation and amortisation (EBITDA) of £342,000. In the view of Greene King the pubs are currently punching below their weight. The company expects to convert the sites into its pub restaurant brands, Hungry Horse and Eating Inn. "We expect, following targeted capital investment and operational synergies from integration into Greene King, that these sites will return to more normalised, historic trading levels, equating to c. 7x EBITDA," Greene King said. Punch Taverns noted that the sale brings the number of pubs offloaded to Greene King up to 23 over the last 12 months for a total consideration of £51.6m. These 23 pubs had a net book value of £52.7m at the most recent balance sheet date prior to their disposal and generated earnings before interest and tax of £4.75m in the relevant financial year prior to their disposal.Punch said the proceeds from the latest sale will be used to reduce debt and reinvest in the estate.