Enterprise Inns, the country's No 2 pub landlord, sold one-tenth of its estate for £318m yesterday in a deal that will lessen the blow of next year's smoking ban in England and Wales.
The group pulled off five years' worth of pub disposals in a single transaction, selling 769 outlets to Admiral Taverns, the tenanted pub group controlled by the Landesberg and Rosenberg families. It has got rid of some of its smallest pubs that sold more drink than food, making them more vulnerable to the forthcoming ban on smoking.
Ted Tuppen, the chief executive of Enterprise Inns, said: "These were traditional pubs that were more wet-led than average. They weren't bad, they just didn't fit our profile longer-term." The clutch of pubs did not pull their weight within the Enterprise estate, each contributing £40,000 of profit a year, about a third less than the group's bigger outlets.
Enterprise, which runs leased and tenanted pubs, said last November that it had earmarked about 800 outlets to be sold. It had expected to offload about 150 a year but received an offer it could not turn down for the entire batch from Admiral. Mr Tuppen said the group had made a £60m profit to the book value of the 769 outlets.
Admiral has grown quickly since it was established in March 2004, swallowing bottom-end pub estates from bigger rivals, such as Enterprise Inns and Avebury Taverns, and the Globe Pub Company. It is now the country's third-biggest landlord, behind Punch Taverns and Enterprise.
The City welcomed the deal and shares in Enterprise rose 10p to 991.5p. Analysts said the disposal, which will initially dilute its earnings by about 2 per cent, increased the quality of Enterprise's estate and its capacity to buy back its shares.
Mr Tuppen said the group was "well advanced" with its plans to counteract the impact of next summer's smoking ban. Many of its 7,700 outlets are large sites that serve food, making them popular with families and non-smokers. He is encouraging pub tenants to develop outside areas by installing heaters and providing shelter for those drinkers who still want to light up.
Scotland, which banned smoking in March, has been a testing ground for the industry. Mr Tuppen said the 100 pubs Enterprise owns north of the border had seen a "small drop in trade" on average, but that it varied from pub to pub.Reuse content