Belhaven owner Greene King snaps up Cloverleaf for £56m

Belhaven-owner Greene King is paying some £56 million for pub restaurant business Cloverleaf as it looks to ramp up its lucrative food offering.

The deal will add a dozen outlets to an estate that already includes Loch Fyne sea food restaurants, the Hungry Horse carvery chain and more than 300 watering holes north of the Border. Greene King plans to invest about 25m to finance at least ten new-build Cloverleaf openings over the next two years as part of a strategy to focus on food-led sites.

Founded in 2004 by former Whitbread executives Gary Douglas and John Winder, Blackburn-based Cloverleaf operates across the north of the England and the Midlands. The outlets operate under individual brand names.

Greene King chief executive Rooney Anand said: "This is an exciting acquisition as Cloverleaf operates large, freehold, quality pub restaurants … and is well positioned to capitalise on the growing carvery market. There is a strong pipeline of new sites."

While none of the planned openings are in Scotland, Anand said a move north of the Border had not been ruled out.

News of the takeover came yesterday as the Suffolk-based group said strong food takings and a "positive" result in January, compared to a year earlier, helped offset weaker pre-Christmas sales which were knocked by the "inclement weather".

Like-for-like sales rose 3.9 per cent across its Greene King retail estate, with sales up 10.3 per cent at Hungry Horse carveries and 3.6 per cent ahead at Belhaven over the 38 weeks to 23 January. Food sales rose 8.2 per cent on a like-for-like basis at the retail arm.

During the past three years, the firm has focused on value and higher margin food sales helping it outperform competitors who have struggled amid a challenging consumer backdrop.

As a result, full-year margins at its retail business will be "slightly ahead of last year", the company said, but echoed its peers in noting caution on the outlook.

"The short-term outlook for the UK consumer is unclear, but we are confident we will continue to deliver a sector leading performance and meet our expectations for the financial year," Greene King told investors.

The group will have about 900 managed pubs following the Cloverleaf takeover and more than 1,500 tenanted or leased sites.At its brewing business, own-brewed ale volumes fell 3.3 per cent against a 7.6 per cent drop in the wider market over the 38-week period.

City reaction to the update and acquisition was favourable, with analysts at Numis Securities upping profit forecasts for the current financial year and following two years.

They are now pencilling pre-tax profits of between 136m and 138.9m for the year to May, up from 123m a year earlier.

Richard Curr, heading of dealing at Prime Markets, which has a "buy" rating on the shares, said: "Any concerns over the impact of Christmas trading on the full-year outcome will have been laid to rest with the trading statement and acquisition announcement."

Greene King confirmed that the integration of Dunbar-based Belhaven, which it paid 187m for in 2005, was "on track".

Under the previously-announced changes, it will merge the Greene King and historic Belhaven brewing operations into a single business, headed by Belhaven's current managing director, Euan Venters.