Pub company Punch is to demerge its managed and leased pubs divisions before commencing a sell-off of the leased businesses, reducing the estate from over 5,000 sites to 3,000.
The move comes following a strategic review of the business launched by chief executive Ian Dyson in October last year.
Punch's managed business Spirit will form one independent public company, while the leased and tenanted estate will make up a second.
The process is expected to take until the end of the summer.
It is expected to allow Punch to significantly reduce the £3b debt pile it has built up after making a series of highly leveraged acquisitions during the credit boom including the £2.7b acquisition of Spirit Group in 2005.
Commenting on the news Dyson said: "We believe that there is a significant value creation opportunity at Punch, with immediate upside in managed and longer term upside in leased. We do not believe that either opportunity can be maximised within the current Group structure and accordingly, we propose that the two businesses be separated.
"Spirit will be positioned to deliver market leading sales and profit growth and to expand with the aim of becoming the UK's leading managed pub operator. Punch will be positioned to drive long term value by downsizing to a core estate of around 3,000 pubs with the aim of becoming the UK's highest quality and most trusted leased operator."
By Neil Gerrard
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