S&N in £750m pub deal talks with Nomura

Scottish & Newcastle is planning to divest itself of its property interests in the UK to reduce its debts and concentrate on its brewing interests.

As part of phase one, the company is in discussions with Nomura, the Japanese bank, over the sale of up to 700 pubs which the brewer would then manage under long-term contracts. The company has a total of 1,500 pubs.

It is understood the sale price, reported to be about £750m, has been reduced to reflect the management deal, although a spokesman said details were not being released.

Nomura is looking for partners to take a stake in the pub empire, although there are rumours that they could be acquired in a management buyout.

S&N reported debts of £3.1b last October, up from £1.6b in October 2001, mainly through paying £1.5b to Danone for its Brasseries Kronenbourg beer business.

S&N announced last July it was looking for ways to release capital from its pub chains on the basis of sale-and-manage-back contracts. Income would be generated from supplying the pubs with Scottish Courage beer.

Despite poor summer trading last year its outlets increased turnover by 4.3%, with operating profit up by 6.7%. Like-for-like sales increased by 7% in Chef & Brewer and 6% at Premier Lodge, neither of which is likely to be up for sale yet. The company has increased the number of Chef & Brewer outlets to 121 and the number of Premier Lodge sites by four to 131, comprising more than 8,000 rooms.

After a spending spree ending with the purchase of a 47% stake in Mythos Breweries of Greece last August, S&N has a strong market position in 12 European countries and number one position in three of the top six European markets for beer - the UK, France and Russia.

Last week S&N announced it had appointed Tony Froggett chief executive. The 54-year-old Australian is a veteran of the spirits industry.

Source: Caterer & Hotelkeeper magazine, 17 - 23 April 2003