THE chief executive of Greene King has underlined the bar and brewing giant??s commitment to its Belhaven business in Scotland, as it closes in on a deal which would transform it into UK??s biggest pub operator by size.
THE chief executive of Greene King has underlined the bar and brewing giant??s commitment to its Belhaven business in Scotland, as it closes in on a deal which would transform it into UK??s biggest pub operator by size.
Rooney Anand was speaking as Greene King, whose second all-share bid for Spirit Pub Company has been recommended, overcame a ??challenging backdrop?? to post record first half sales in the 24 weeks to October 24.
The company, which has a combined managed and leased pub estate of 1094 pubs around the UK, lifted underlying revenue by 5.3 per cent to £614.9 million.
It was the first time first-half sales at Suffolk-based Greene King had exceeded the ??milestone?? of £600m, having hit annual sales of £1 billion for the first time two years ago.
Underlying pre-tax profits increased by three per cent at £81.6 million in a period which saw the company open four outlets in Scotland.
Three of the openings ?? the Kingsway Farm in Dundee, the Wallace Well Farm in Glasgow and the Elginhaugh Farm in Edinburgh ?? trade under its Farmhouse Inn carvery brand, while the Oystercatcher in East Kilbride belongs to the Hungry Horse estate.
The launches follow a £1 million investment made by Greene King in the Belhaven Brewery in Dunbar two years ago, and the launch this year of a range of Belhaven craft beers this year. Mr Anand said: ??We continue to invest in our Scottish pub estate. We see Scotland, the Scottish market and our Scottish business as an area we have earmarked for investment.
??That??s good news in our view.??
Greene King has seen an improved share offer for Spirit Pub Company, whose 1200-strong estate includes 800 managed outlets, approved by the Spirit board since year-end.
Circulars and documents will be sent to shareholders ahead of Christmas, and the boards of both companies will hold a formal EGM in January over the deal.
The transaction, which Greene King anticipates will bring financial synergies of at least £30m a year, could be rubber-stamped in April and May.
Asked how transformational the deal, which values Spirit at £773.6m, would be for Greene King, Mr Anand said: ??It represents a fantastic opportunity for Greene King to be the leading pub company in the sector by dint of size, with over 3000 pubs and 1800 retail pubs.
??But more than that, the opportunity to put together the best pubs, the best brands and the best people between the two businesses and forge something really special, I think is a really good opportunity. The financial synergies and financial benefits that flow from bringing the two businesses together will deliver substantial value to both sets of shareholders.??
Meanwhile, Greene King described as ??disappointing?? the recent vote by MPs to allow pub tenants in England to be entitled to market only rent reviews, and to buy beer free of tie.
Mr Anand said the vote was ??another example of Whitehall interference is getting in the way of folks who are trying to earn a living??.
And he said it was disappointing that this legislation was passed given the industry??s commitment to working with the government on a code of practice, which aims to provide more balance to the relationship between pub companies and their tenants.
Mr Anand noted: ??We have had no recourse to arbitration for our licensees which is testament to the fact a company which has been running pubs for a couple of hundred years probably knows how to do it.
??To have the helping hand of government come in now and commit to statute is disappointing. That said, it doesn??t change our view around running and owning tenanted pubs.??
Greene King's first-half performance led the board to recommend increasing the dividend per share by 4.6 per cent to 7.95p.
Looking ahead, Mr Anand said forecasts of real wage growth and falling oil prices, allied to low interest rates, offered hope that consumer confidence will pick up in 2015. He added Christmas was shaping up well, with bookings up seven per cent on last year.
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