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Greene King set to dispose of 16 pubs to push through acquisition of rival

Published:  27 May, 2015

Greene King is set to dispose of 16 pubs in order to push through its purchase of the Spirit Pub Company.

Greene King is set to dispose of 16 pubs in order to push through its purchase of The Spirit Pub Company.

The move comes eight months after brewery and pub operator Greene King proposed taking over The Spirit Company's 1200-strong pub estate in a deal worth £773.6m. However the Competition and Markets Authority flagged up 16 areas where pubs from the two companies were is such close proximity that they were key rivals, with no competition from other players. A further 1,000 sites were deemed to offer enough competition from other players for this not to be a problem, the CMA said.

Seven of the pubs in earmarked for disposal belong to the Spirits Pub Company, and nine belong to Greene King, a spokesman confirmed. The property and pub names will be sold, and where the pubs are managed, staff will be transferred to the new owner. The Spirit Company has accepted the proposal, which will address competition concerns and mean that a more detailed phase 2 merger investigation is less likely to be necessary. The CMA now has until 21 July to consider whether to accept the undertakings. 

The two companies confirmed they are keen to complete the sale of The Spirit Pub Company to Greene King by the end of the first half of the year.

Last month the Spirit Pub Company, whose pub brands include Chef & Brewer, John Barras, Taylor Walker and Fayre & Square, reported pre-tax profits of £3m in the first half of the year, up £1m on the previous year. EBITDA rose to £71m, from £60m a year earlier.

Greene King operates more than 1,900 pub oulets, the majority of which are in the South East of England. It has previoulsy committed to boosting its retail business, which includes the Hungry House, Old English Inns, and London premium pubs Metropolitan and accounts for around 73% of its business. It also has around 900 tenanted, leased and franchised businesses - which Greene King wants to cut around 750 to boost its retail business -  and around 15% of its business comes from its brewery division, which makes Greene King IPA, Old Speckled Hen and Belhaven Beers.

The Bury St Edmunds-based brewer has also committed to boosting its wine retail sales and last July it saw wine sales up 9%. In the 24 weeks to 19 October 2014, revenue rose 3.3% to £614.9m, with retail LFL sales up +0.8% and +1.5% in the last 12 weeks.