Greene King buys 11 Punch pubs

Greene King has agreed a deal to buy 11 freehold managed pubs from Punch Taverns for £30.4 million, more than £2m below their total book value.

Seven of the pubs are in London and include the Bunch of Grapes in Knightsbridge and St. Margaret's in Twickenham.

The other four are in Scotland, where Greene King operates the Belhaven business, and include the Burnbrae in Bearsden, near Glasgow.

The pubs come from the Punch Pub Company managed operation, formerly known as Spirit Group.

Rooney Anand, chief executive of Greene King said: "'I am really pleased we have been able to acquire these high quality assets, further strengthening our presence in two key geographies for us.

"They also match the criteria we set out when announcing our recent rights issue. They will be seamlessly integrated into our retail operations in both England and Scotland and we look forward to operating these pubs successfully over the coming year."

Punch Taverns said that for the financial year ended August 23, 2008, the pubs being disposed of generated earnings before interest and tax of £3.55m. As at March 7, 2009, they had a book value of £32.7m.

Greene King will finance the acquisition with funds raised through its recent rights issue. The brewer said it expected the pubs to be earnings enhancing in the first full year.

Punch chief executive Giles Thorley said the deal "is in line with our stated strategy of increasing free cash flow and reducing the overall level of our debt, whilst seeking to maintain investment in our high-quality pub estate."

The deal is expected to complete on July 1.