The much-anticipated deal will also lead to a radical management overhaul, with the chief executive Lord Daresbury - who is the last member of the Greenalls family on the board - planning to step down and become non-executive chairman once it is completed.
Analysts said the deal was earnings enhancing for S&N and would boost its position in the profitable budget hotels market. S&N was the second best performing FTSE 100 stock yesterday, closing up 19p at 612p.
The Greenalls package will comprise 531 managed pubs, 234 pub restaurants, 61 lodges and 42 tenanted pubs, which include the Henry's Tables, Squares, Quincey's and Miller's Kitchen chains. S&N, which currently owns 2,650 pubs, will sell or free of tie 600 of its smaller pubs to comply with the 1989 government beer order that prevents companies from owning more than 2,739 outlets.
Greenalls will be left with a streamlined group, said to be worth pounds 600m, that will include 17 four and five star De Vere hotels, 10 Village leisure hotels and one Greens Health & Fitness club. The company plans to return pounds 430m - or 160p a share - to shareholders and use the balance to clear its debts.
Lord Daresbury said: "This is very much the right move for us. We've had a tough time with the pub business." The group sold its tenanted pubs and some small hotels to Nomura, a Japanese investment bank, earlier this year and has also disposed of its off-licences and gaming machine businesses.
Analysts yesterday predicted Greenalls' remaining businesses would be vulnerable to predators. Speculation is rife over the future of the De Vere hotel chain, which Whitbread and Swallow are said to be interested in.
Andrew Thomas, Greenalls' chairman, will stand down after the sale early next yearand Alan Rothwell, the finance director, will leave the group at a later date. Greenalls shares closed down 7p at 361p yesterday.