Greene King Being Sold For £2.7 Billion
CK Asset, which is one of the largest property developers in Hong Kong and an international investment group, has made a recommended £2.7 billion cash offer for Greene King, the UK’s leading integrated brewer and pub retailer operating over 2,700 pubs, restaurants and hotels across England, Wales and Scotland. Including debt, the enterprise value of the proposed transaction is approximately £4.6 billion.
CKA is a long-term and strategic investor in stable, profitable and cash flow generating businesses that benefit from real estate backing. CKA believes that the UK pub and brewing sector shares these characteristics and that pubs will continue to be an important part of British culture and the eating and drinking out market. CKA has invested in the UK pub sector and owns a small portfolio of freehold pubs, all of which are leased to the Greene King Group.
CKA’s strategic philosophy is to support management teams to develop and implement plans which create long-term value. This is underpinned by access to strong financial backing. CKA believes it has the financial resources to invest capital in new initiatives, where appropriate, to improve the sustainability, profitability and competitiveness of Greene King.
Gerald Ma, executive committee member and general manager of the Corporate Business Development Department at CKA, says: “We have come to know Greene King well as we have been an owner of a portfolio of pubs which have been leased to them since late 2016. We share the strategy which Greene King has set out in its recent results announcement, that is to focus efforts on developing the brand, enhancing the service offering, training and retaining talent, executing an active estate management strategy, and all under a prudent financial management policy. I look forward to working closely with the management team as we embark on the next stage in the company’s growth.”
Philip Yea, chairman of Greene King, comments: “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.”
For the year ended 28 April 2019, Greene King reported revenue of £2.217 billion (equivalent to approximately HK$21.061 billion) and its operating profit before exceptional and non-underlying items was £368 million. Profit before tax and exceptional and non-underlying items was £247 million and net profit before tax was £173 million.
