Greene King secured backing for a £70 million acquisition today as its scramble to buy pubs in London ahead of the Olympics gathers pace.
Bid target Capital Pubs rejected two approaches from London-based Fuller, Smith & Turner last month, but as Greene King’s proposal is worth nearly 18% more its management has swung behind the offer.
The interest from Suffolk-based Greene King values the company at £70 million and marks its third hefty pub group acquisition this year following the takeovers of RealPubs and Cloverleaf for a combined £108 million.
Capital’s pub portfolio consists of 34 outlets in and around the London area, which Greene King says it intends to combine with the RealPubs estate of 14 premium London pubs.
Chief executive Rooney Anand said the deal represented another step in its strategy of building its presence in the capital and takes its total estate in the Greater London area to 250 pubs.
He expects the sites to do especially well as the 2012 Olympics approaches, but added that longer term its expects London to outperform the national market.
Greene King also sees significant scope to push up the proportion of food revenues generated by Capital's pubs.
Capital said today that recent trading has been strong with 22 pubs open for a year generating like-for-like revenues growth of 6.5% in the past 15 weeks, while the 12 being refurbished should generate £20,000 per week each when finished and bedded down.
After Fuller’s interest become public it subsequently received approaches from a number of other parties, one of which was Greene King, it added.
Fuller had threatened to make a hostile bid for the company after its two approaches - of 175p initially and then 200p per share - were both turned by Capital’s board as substantially undervaluing the business.
Clive Watson, who previously worked for Regent Inns and set up Capital Pubs in 2000, said: "Greene King is an excellent cultural fit and will be a good home for both the business and our staff."
Greene King, which is best known for its Old Speckled Hen and Greene King IPA beers, expects the deal to add its earnings in the first full year of ownership and to generate savings of £2 million though reduced overheads and purchasing benefits.