Dutch brewer Heineken has agreed a deal worth £305 million to acquire more than half of Punch Taverns’ UK estate, making it the third largest pub operator in the country.
The transaction relates to around 1,900 pubs across the UK, which will bolster Heineken’s Star Pubs & Bars business to almost 3,000 locations.
Heineken believes that there is ‘compelling strategic rationale’ in acquiring the portfolio from Punch and is confident in the ‘sustainable revenue source’ that the rental income from the Punch portfolio provides. It has already invested £20 million a year in its UK pub and bar business since 2014.
The pubs recorded combined turnover of £242 million, with pre-tax earnings of £109 million, in the year to 20 August.
Following completion, the pubs acquired by Heineken UK will be operated for six months by Vine Acquisitions, a company set up specifically as a vessel for the acquisition by private equity group Patron Capital. After that time, they will be fully integrated into the existing Star Pubs & Bars business.
Commenting on the transaction, Heineken regional president Europe Stefan Orlowski said: “This transaction is a significant step forward in our strategy to unlock value in the UK pub market. The performance of our Star Pubs & Bars business clearly shows that well invested pubs, in the hands of skilled and ambitious independent operators can outperform. Leveraging our extensive experience will enable us to realise increased potential for further growth from the pubs we are acquiring and deliver positive returns to our shareholders.”
And David Forde, managing director of Heineken UK, added: “Today’s announcement is a huge vote of confidence in the Great British pub. Our proven track record of success demonstrates that well-invested and well-run pubs in the leased and tenanted sector can thrive. Today’s development is good news for pub-goers across the UK who will see the benefit of better pubs in their communities. We look forward to welcoming new licensees in to Star, and to working with them to grow their businesses.”
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