Greene King to be Sold to Hong Kong Company in £4.6b Deal

Main Photo: A bedroom at the Royal Hotel at Ross-on-Wye

Date: August 2019

Location: 3,100 pubs, or which 100 operate as hotels, throughout the UK…from Aberdeen to the Isle of Wight.

Name: Several brands including Farmhouse Inns, Chef & Brewer, Greene King Inns, Old English Inns and others!

No. of Keys: TBA

Seller: Greene King, the UK’s largest pub retailer and brewer. It is based in Bury St Edmunds, Suffolk, England. The company owns pubs, restaurants and hotels. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

The company is more than 200 years old, who been running pubs and brewing since the company was founded in 1799 by 19 year-old Benjamin Greene.

During it’s first 100 years, Greene King grew from the Greene’s Brewery to Greene, King and Sons, following an amalgamation with Frederick King’s St Edmunds brewery in 1887.

Benjamin Greene partners with William Buck – an elderly yarn-maker looking for a strong investment to secure his retirement and together they bought the 100-year-old Wright’s Brewery in Westgate Street and rename it Westgate Brewery.

By the time the two World Wars have ended, Greene King had acquired Rayments Brewery and opened a new brew house, and by the 1960s a new bottling store had been built and head office was modernised. Greene King had become an established player in the brewing and pub industry.

They lease the Theatre Royal Bury St. Edmunds to the National Trust. Located opposite Westgate Brewery, it’s the country’s sole remaining example of a playhouse dating from the Regency period. They also acquired Biggleswade-brewery Wells & Winch.

They produced a St Edmund Ale Special Brew to celebrate the 80th birthday of novelist Graham Greene – the great grandson of the company founder, Benjamin Greene.

They gained more than 500 pubs by acquiring Marston’s southern estate and Morland.
Greene King’s portfolio is increased further following a number of acquisitions including Old English Inns, Belhaven and Loch Fyne.

Their hotel portfolio started with the addition of more than 100 charming and historic pubs from Old English Inns

They acquired Spirit Pub Company and bring great brands – including Chef & Brewer, Flaming Grill, Wacky Warehouse, Taylor Walker and Good Night Inns into our portfolio.

Buyer: Hong Kong-based real estate, property development and investment company CKA (also known as CK Asset Holdings).  The sale would see the business move under CK Bidco, a newly incorporated, wholly-owned, indirect subsidiary of CKA, which owns the Sheraton Hong Kong Hotel & Towers (as well as three other major hotels and serviced apartments in HK and The Great Wall Hotel, Beijing and the Sofitel Shenyang Lido in mainland China) as well as a small portfolio of freehold pubs in the UK, which have been leased to Greene King since 2016.

CK Asset Group has a total market Cap of HK$274bn and is 32% owned by the Li family, and the company is headed up by Li Ka-shing.

Greene King is to be sold to the Hong Kong-based buyer in a deal that gives the brewery and pub group an enterprise value of £4.6b.

CKA will pay £2.7bn for the business, based in Bury St Edmunds, Suffolk, and take on £1.9bn of debt.

In June Greene King reported stable pre-tax profits (adjusted) of £246.9m, an increase of 1.6% on the previous year.

George Colin Magnus, non-executive chairman designate of CK Bidco, said: “CKA’s strategy is to look for businesses with stable and resilient characteristics and strong cash flow generating capabilities.

“The UK pub and brewing sector shares these characteristics and we believe that this sector will continue to be an important part of British culture and the eating and drinking out market in the long run. Greene King, being a leading integrated pub retailer and brewer with strong real estate backing, is well positioned to capture the opportunities that lie ahead.

“We are proud of our track record in the UK and our philosophy is to support strong management teams and provide investee companies with access to patient capital in order to create sustainable long-term value.”

Philip Yea, chairman of Greene King, said: “The Greene King board is confident in the long term prospects of the business but believes this offer represents a good opportunity for shareholders to realise value for their investment at an attractive premium, while also ensuring the future success of Greene King for employees, partners, customers and suppliers. We are therefore unanimously recommending it to our shareholders.”

Nick Mackenzie, chief executive of Greene King, added: “Greene King has a well-invested estate in prime locations, leading brands, a rich history and a talented team of c.38,000 people serving millions of customers across the country every week.

“CKA is 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.”

Shareholders will receive 850p a share under the deal, which has been given the backing of the board.

THPT Comment: OK – is it coincidence that CEO, Rooney Anand (no relation) jumped ship just a few months back to take up the new role as Chairman of Casual Dining Group…? Probably! With their hotel heritage, will the new owners be keen to develop the hotel stock further?

First Seen: The Caterer

The Hotel Property Team (THPT) is a small group of highly experienced business professionals. Between us, we provide a range of skills and experience which is directly relevant to those involved in the hotel property market.

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