Punch pays £335m for InnSpired's pubs

Punch Taverns took another step towards regaining its title as the UK's largest pubs company yesterday, as it confirmed the acquisition of the InnSpired Group for £335m, adding another 1,000 outlets to its tally of more than 7,300.

Punch Taverns took another step towards regaining its title as the UK's largest pubs company yesterday, as it confirmed the acquisition of the InnSpired Group for £335m, adding another 1,000 outlets to its tally of more than 7,300.

The acquisition will see Punch take on the £258m of debt that InnSpired has on its books, with the deal being financed by a combination of cash and debt through Punch's existing bank facilities. The company said the deal was an excellent fit with its wider portfolio and would generate cost savings in excess of £3m a year. It said the acquisition would be earnings enhancing within its first full year on the books.

Its new tally of about 8,300 pubs will leave Punch lagging its biggest rival, Enterprise Inns, by a little less than 750 pubs. Together, they now account for more than a quarter of the UK's 60,000 strong sector.

Punch lost its place as the largest pubs landlord this year, when Enterprise snapped up the Unique pub company's 4,000 outlets for £609m. Punch's last major acquisition came at the end of 2003, when it bought Pubmaster's 3,100-strong portfolio for £1.2bn

In an effort to avoid competition issues as a result of the InnSpired deal, Punch also sold 88 pubs, to Admiral Taverns, for £22.6m yesterday. Of the 88, 55 are from the InnSpired portfolio, and the remaining 33 are from the existing Punch estate. The pubs were sold in areas where the enlarged group had been left with too great a concentration of outlets.

Giles Thorley, Punch's chief executive, said: "The acquisition of InnSpired once again demonstrates Punch's ability to secure attractive pub assets at realistic prices. This estate further enhances the group's geographic coverage and strengthens its presence in the south and south-west in particular. The significant investment opportunity it offers will deliver good returns from the outset and attractive growth potential for the future."

Punch's shares rose more than 4 per cent to 523p on the news yesterday, but came back during the day to close up 11p at 513p, giving the company a market value of £1.27bn.

Both Punch and Enterprise have been forced to defend their position in the pubs market, after a parliamentary committee accused them of giving their tenants a bad deal. However, the Office of Fair Trading came to the defence of the companies this week, when it told the committee it did not believe the pubs industry had any competition issues. The committee's conclusions are expected to be published this autumn.