Greene King to close brewery in pounds 219m takeover of Morland
Wednesday 23 June 1999
Greene King said it would close Morland's brewery at Abingdon, with the loss of 100 jobs, transferring Ruddles and Old Speckled Hen, Morland's biggest brands, to its own brewery in Bury St Edmonds.
After taking on a tranche of debt, Greene King will pay a total consideration of pounds 145m, or 445p a share, a 20 per cent premium to Morland's share price before talks were disclosed. Morland shares rose 4 per cent to close at 436.5p.
Tim Bridge, chief executive of Greene King, said the deal would yield pounds 6m to pounds 8m a year of savings for shareholders. The cost of achieving the savings would be pounds 8m to pounds 10m.
The deal will give Greene King control of 285 tenanted pubs and 123 managed houses, most of them located in the Thames Valley. It will also have four of the country's leading cask ale brands - Abbot, Ruddles, IPA and Old Speckled Hen. "Greene King is now a very different animal than it was a few years ago. This deal is just another part of the jigsaw to becoming the South's leading pub and cask ale operator," Mr Bridge said.
The deal follows the group's purchase of 165 pubs from Wolverhampton and Dudley breweries, the victor in the recent hostile takeover battle for Marston, Thompson & Evershed. The deals will give Greene King a total of 1,670 managed pubs. It will also leave the group with heavy debts, with gearing standing at more than 90 per cent, up from 50 per cent last year.
However, executives said strong cash flow meant the debts were manageable. Its shares were unchanged yesterday at 676.5p. Mr Bridge it was likely some of the managed pubs would be disposed of to help reduce debts.
Martin Mays-Smith, chairman of Morland, said: "We view the prospect of Morland losing its independence with sadness, but recognise the pressures that exist for consolidation in the regional brewing sector."
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