Greene King is to be sold to a Hong Kong-based real estate company in a deal that gives Britain’s largest brewery and pub group an enterprise value of £4.6b.
Property development and investment company CKA (also known as CK Asset Holdings) will pay £2.7b for the business, based in Bury St Edmunds, Suffolk, and take on £1.9b of debt.
In June Greene King reported stable pre-tax profits (adjusted) of £246.9m, an increase of 1.6% on the previous year.
The sale would see the business move under CK Bidco, a newly incorporated, wholly owned, indirect subsidiary of CKA, which owns the Sheraton Hong Kong Hotel & Towers as well as a small portfolio of freehold pubs in the UK, which have been leased to Greene King since 2016.
George Colin Magnus, non-executive chairman designate of CK Bidco, said: “CKA’s strategy is to look for businesses with stable and resilient characteristics and strong cash flow generating capabilities.
“The UK pub and brewing sector shares these characteristics and we believe that this sector will continue to be an important part of British culture and the eating and drinking out market in the long run. Greene King, being a leading integrated pub retailer and brewer with strong real estate backing, is well-positioned to capture the opportunities that lie ahead.
“We are proud of our track record in the UK and our philosophy is to support strong management teams and provide investee companies with access to patient capital in order to create sustainable long-term value.”
Philip Yea, chairman of Greene King, said: “The Greene King board is confident in the long term prospects of the business but believes this offer represents a good opportunity for shareholders to realise value for their investment at an attractive premium, while also ensuring the future success of Greene King for employees, partners, customers and suppliers. We are therefore unanimously recommending it to our shareholders.”
Nick Mackenzie, chief executive of Greene King, added: “Greene King has a well-invested estate in prime locations, leading brands, a rich history and a talented team of c.38,000 people serving millions of customers across the country every week.
“CKA is an experienced UK investor and shares many of Greene King’s business philosophies. They understand the strengths of our business and we welcome their commitment to working with the existing management team, evolving the strategy and investing in the business to ensure its continued long-term growth.”
Shareholders will receive 850p a share under the deal, which has been given the backing of the board.