Greene King, one of UK’s leading pub retailers and brewers, has been sold for GBP 2.7 billion (USD 3.3 bn) to Hong Kong based and Cayman Islands incorporated CK Asset Holdings (CKA, previously known as Cheung Kong Property Holdings). The real estate company and property developer belongs to Hong Kong’s richest family which was founded by 91-year-old multibillionaire Li Ka-Shing and is currently run by his son Victor Li.
As one of the largest property developers in Hong Kong, with a leading market share in Hong Kong, an extensive portfolio in Mainland China, and a significant presence in Singapore and the United Kingdom, the company takes advantage of the weak British pound and escapes the unrest in its home city that has created paper losses for Mr. Li of around USD 3 bn since the end of July.
George Colin Magnus, future chairman of the company that will acquire Greene King, said the company fitted a “strategy for businesses with stable and resilient characteristics and strong cash flow generating capabilities”.
Greene King is a 220-year-old pub and beer company which operates 2,700 pubs, restaurants and hotels and operates the Greene King Brewery in Bury St Edmunds and the Belhaven Brewery in Dunbar/Scotland.
The cash bid of 850p per share is a 51% premium to the closing price of Greene King shares the day before the deal was announced, and values the company at GBP 2.7 billion, or GBP 4.6 billion (USD 5.62bn) including the debt that CKA will be taking on.
Greene King said in a statement CKA did not intend to make "material changes" to group and management staff numbers. The company also had had no plans to "initiate any material headcount reductions within the Greene King organization as a result of the acquisition."
CKA started business with Greene King in December 2016, when the company bought 136 pubs and leased them back to the pub operator. It is believed that the business gave CKA enough inside knowledge to value the current business and understand the operating model.
The pub business in the UK is concentrating on a very fast pace. In 2017, Dutch brewer Heineken agreed to take over UK’s third largest pubs group Punch Taverns in a deal worth GBP 402.7 million (USD497.2m) (inside.beer, 5.1.2017).
In July, Stonegate acquired rival Ei Group (previously known as Enterprise Inns) in a GBP 3 billion (USD 3.67bn) deal adding more than 4,000 pubs to Stonegate’s existing 772 sites, thus creating by far Britain’s largest pub company.