Greene King to be sold to Hong Kong property firm
Suffolk-based pub and brewing giant Greene King is to be purchased by Hong Kong real estate firm CKA in a deal worth £2.7 billion.
Greene King, which owns around 2,700 pubs, restaurants and hotels in the UK, is the latest UK brewer to be sold to a foreign investor after Fuller’s was recently acquired by Japanese brewing firm Asahi.
The terms of the deal were deemed “fair and reasonable” by Greene King’s board of directors and shares in the business shot up by 50 per cent after announcing the agreement.
Greene King’s chief executive Nick Mackenzie welcomed the deal, saying that CKA has much in common concerning "business philosophy" and expressed his confidence that the Greene King business will be in safe hands.
Mackenzie said: “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 board will recommend that company shareholders support the deal, with them having the final say on the transaction.
Leading markets analyst Neil Wilson believes that the volume of property that pubs own in the UK is the key factor currently attracting foreign investment to the sector.
Wilson said: "Greene King owns the freehold or long leasehold on 81 per cent of its properties. The company recently carried out a revaluation of its property estate that indicated a market value of £4.5 billion against the £3.5 billion book value.
"I think we can comfortably expect more pub closures [as a result of the sale]. It's a whopping price that implies CKA sees significant value in the property portfolio”.
In its announcement on the CKA deal, Greene King reassured that there were no plans for “material changes” to be made to group and management staff numbers nor an intention to “initiate any material head-count reductions within the Greene King organisation as a result of the acquisition”.
High costs in Beer Duty, VAT and business rates along with reduced custom has seen numerous pub closures in the UK in recent years, with nearly 1,000 shutting up shop in 2018 according to figures published by property firm Altus Group.