Pub giant Greene King has agreed to an offer from Hong Kong real estate firm CK Asset Holdings (CKA), which values the company at £2.7bn (€3bn).
CK Asset Holdings is owned by one of Asia’s richest men, Li Ka-shing. His company has made an 850p-a-share cash offer for the pub firm and brewer, which has 2,700 sites across the UK. That values Greene King’s stock at £2.7bn (€3bn). CKA will also take on Greene King’s £1.9bn (€2.1bn) debt, which means it will effectively pay a total of £4.6bn (€5bn) for the business.
Colin Magnus, non-executive chairman of CK Bidco, the company through which CKA aims to make the acquisition, 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.”
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 circa 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.”
The relative weakness of sterling amid continued Brexit uncertainty has made some British businesses attractive to foreign investors and recently the UK pub sector has seen a wave of consolidation, including the acquisition of Fuller’s beer business by Japanese brewer Asahi for £250m (€273m), and the announcement last month of Stonegate’s move to buy pub operator Ei Group in a deal worth £3bn (€3.3bn).