What Does Greene King Sale Mean For Wandsworth Pubs?
Fears that deal could lead to closures for redevelopment
Pub giant and brewer Greene King, which owns a number of pubs in the Wandsworth area, has been bought by Hong Kong conglomerate CKA.
Suffolk-based Greene King’s portfolio includes the Old Fields on Replingham Road and the Wandle in Earlsfield which is operated through the Metropolitan Pub Company brand. Overall its estate includes roughly 2,700 pubs, restaurants and hotels in total across the UK. The deal is worth £2.9 billion.
Neil Wilson, analyst at Markets.com, told BBC News while the deal was good news for shareholders, it was likely to be bad news for Greene King's customers. "I think we can comfortably expect more pub closures. It's a whopping price that implies CKA sees significant value in the property portfolio," he said.
Market analysts are saying that the weakness of sterling has provided an opportunity for CKA to acquire a significant asset base in the UK which they can choose to continue to operate as pubs or develop at the appropriate time.
A local CAMRA member told us, “I don’t know whether Greene King hold the freehold for all the pubs in the area but I would imagine they do for most. The Wandle could be the pub most ripe for redevelopment but venues doing a good trade are less likely to be closed so it could be a case of use it or lose it.”
CKA said it 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 United Kingdom 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."
Greene King chief executive Nick Mackenzie said CKA shared "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," he added.
Greene King's directors said the terms of the deal were "fair and reasonable" and that they would unanimously recommend it to shareholders who will get the final vote on the tie-up.
Shares in Greene King surged more than 50% after the deal was announced.
CKA was founded by Hong Kong's richest man Li Ka-Shing, ranked 28th in the Forbes' Rich List, whose business empire spans retail, telecoms and power firms.
August 21, 2019