Greene King sells 275 pubs to Hawthorn Leisure

1st May 2014 08:13

Pub, restaurant and hotel operator Greene King has agreed to sell 275 of its tenanted and leased pubs in the UK to Hawthorn Leisure, backed by Avenue Capital Group and May Capital.The company said that the pubs, which were sold for a total £75.6m, were "non-core assets" and the deal is consistent with its strategy."Our strategic plan, announced in July 2010, was to reduce our tenanted and leased estate to 1,200 sites. We believe that a smaller estate than originally envisaged is now more appropriate going forward as we move increasingly to higher growth areas in our markets and to improve the customer offer," said Chief Executive Rooney Anand.The company now expects to reduce the estate to around 750 sites in order to improve both yield and returns.The 275 pubs being sold generated operating profits of £12.4m last year, Greene King said, which implies a disposal multiple of 6.1.Greene King and Hawthorn Leisure have also agreed a three-year beer supply deal for these pubs, "securing continued and valuable nationwide distribution for our industry-leading ale brand portfolio", the FTSE 250 group said.Anand said the company has "several options" for the proceeds of the sale."Depending on site availability and attractive valuations, our first priority will be to seek to further accelerate our retail expansion plans. In the absence of increased investment opportunities, we would also retain the option of using the funds to reduce our overall longer-term gearing position," he said.The stock was 0.7% higher at 896.5p by 08:21 on Thursday.BC