Punch Taverns sells four pubs for £5.3m

BELHAVEN owner Greene King has acquired another four pubs from indebted Punch Taverns, including two managed establishments in Aberdeen.

Greene King will pay 5.3 million in cash for the pubs which generated earnings of 342,000 during the year to August 2009.

The company said it could return the sites, all food-led destinations, to more "normalised" trading levels of nearly double current profits.

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The deal is unconditional and expected to complete on 8 July. Further details about the exact establishments involved were not available yesterday, as staff were still to be briefed on the terms of the deal.

Punch will use the proceeds to chip away at its 3 billion debt mountain, which was accumulated during years of rapid expansion prior to the economic downturn.

During the past 12 months it has sold 23 of its pubs to Greene King for 51.6m.

Rooney Anand, chief executive of Greene King, said the newly-acquired pubs would be converted into the group's Hungry Horse and Eating Inn pub restaurant brands.

The sites, which include pubs in Northampton and Nottingham, are aimed at further strengthening Greene King's position in the UK eating-out market.

"We are pleased to have acquired these sites," Anand said. "They are freehold retail sites in great locations currently trading below their potential."

Greene King has a history of buying quite dear, but also has a track record of making acquisitions work through trading improvements.

In a note to investors, Seymour Pierce analyst Hugh-Guy Lorriman said he expected this latest deal to yield results.

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"Today's acquisition fits this story and we are confident it will succeed in its turnaround," Lorriman said.

Greene King has been on a buying spree financed by cash raised from last year's 207m rights issue.

The group has to date invested 100m of those proceeds on acquiring and improving 34 retail sites throughout the UK.