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Last Updated: Friday, 9 July, 2004, 06:31 GMT 07:31 UK
Greene King expands pub empire
Greene King's Abbot Ale
Greene King's beers includes Abbot Ale
Suffolk brewer Greene King has bought 432 public houses for 654m.

The Bury St Edmunds-based company has purchased the pubs, mainly located in rural or residential areas, from Luton-based Laurel Pub Company.

They will boost Greene King's portfolio by 25% to more than 2,100 outlets, with a third of the Laurel pubs situated in the south east of England, it said.

Laurel is selling the outlets to enable it to concentrate instead on expanding its town and city centre bars.

Greene King said the 432 pubs - Laurel's Neighbourhood Business - complemented its existing business model and were "an excellent geographical fit".

Higher earnings

"We are impressed by the business and we believe that by bringing the two sets of assets and people together we can create one even better company going forward," said Greene King chief executive Tim Bridge.

"The acquisition is entirely consistent with our strategy which has resulted in our comparable earnings per share increasing by more than 10% per annum compound over the past 10 years.

"We believe that we will be able to generate significant synergies from the enlarged estate through our integrated business model, thereby creating further shareholder value."

Greene King has funded the deal through a new 1.2bn banking facility negotiated with Lloyds TSB.

While the brewer admitted its debt levels were now "quite high", it said it was confident they would quickly reduce in the newly enlarged group.

Ian Payne, the chief executive of Laurel, said it was "a great transaction for both parties".

"Laurel Neighbourhood pubs are so attractive because of the skill and dedication of literally thousands of team members," he said.

"These excellent pub professionals will now be given the opportunity to further develop the business under the ownership of Greene King."

Laurel was formed in 2001, when Deutsche Bank's Morgan Grenfell private-equity arm bought Whitbread's pub business for 1.6bn.

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