Greene King to be sold in £4.6bn takeover deal with Hong Kong real estate giant

Britain's largest pub and brewery company Greene King has agreed to a £4.6bn takeover by a Hong Kong-based conglomerate.

CK Asset Holdings, founded by Hong Kong's richest man Li Ka-shing, will pay £2.7bn for the 220-year old brewery company and take on its debt, worth an additional £1.9bn.

Greene King, based in Bury St Edmunds, Suffolk, was founded in 1799 and operates nearly 3,000 pubs, restaurants and hotels, and owns brands including Hungry Horse and Chef & Brewer.

Greene King IPA, OId Speckled Hen and Abbot Ale are among its beer brands.

Nick Mackenzie, chief executive of Greene King, which employs about 38,000 staff, said CK Asset Holdings was an "experienced UK investor and shares many of Greene King's business philosophies".

"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," he added.

CK Asset Holdings counts real estate, energy assets and aircraft leasing among its business interests.

In a statement, the company insisted it had no intention of cutting jobs following the takeover and would continue to support Greene King's apprentice scheme.

It said: "CK greatly values the skills, knowledge and expertise of Greene King's existing management and employees and therefore does not intend to make material changes with regard to the continued employment of the employees and management of the Greene King Group, including the conditions of employment or the balance of skills and functions of the employees and management."

"Nor does CK intend to initiate any material headcount reductions within the Greene King organisation as a result of the Acquisition, although it is expected that each of the Greene King non-executive directors will resign as directors of Greene King on or shortly after the effective date."

Greene King's shares shot up 50% by market close on Monday, to meet the 850p per share being offered by CK Asset Holdings.

The brewer saw full-year pre-tax profit drop in 2018 - despite a summer of favourable weather and World Cup fever - down 12.5% to £172.8m on group revenue that grew 1.8% to £2.2bn in the year to 28 April.

This was during a period in which Greene King reduced the average number of pubs trading by 2.5%.

Operating profit was down 10.7% to £27.4m, driven by the estate reduction, increased costs and lower production volumes in two of its breweries.

The small pre-tax earnings and revenue increases were driven by the performance of its Pub Company division, which saw a rise in like-for-like sales of 2.9% and revenue growth of 1.8% to £1.8bn, which helped to fend off the effects of the pub closures.

Greene King's agreed takeover by CK Asset Holdings marks a continuing interest of Asian giants in the UK brewing sector, after London Pride owner Fullers sold its beer-making operations to the Japanese company Asahi in January for £250m.

Nick Burchett, fund manager at Greene King shareholder Cavendish Asset Management said that CK Asset Holdings' 850p per share offer for Greene King "is a great reflection of its value."

He added: "The business has a good portfolio of freehold property and a strong position in the thriving UK pub and brewing sector.

"And with neither opposition nor competition on the horizon, it seems like its a done deal."