Scottish & Newcastle, the UK's biggest brewer, is to sell its pubs and restaurant business to British hospitality firm Spirit Amber Bidco.
S&N, maker of the top-selling Kronenbourg and Fosters lager brands, said it had agreed to sell its retail division to Spirit for £2.5bn ($4bn).
"The price exceeded our expectations," Tony Froggatt, chief executive of Scottish and Newcastle, told BBC World Business Report.
The deal, which still requires the backing of S&N shareholders, comes seven months after the company put its pubs and restaurant division up for sale in order to focus on its international brewing business.
S&N's retail division comprises 1,400 pubs, restaurants and hotels, including the Chef & Brewer pub chain and the Premier Lodge hotels group.
Supply agreement
Under the deal, Spirit has agreed to buy S&N beer and cider at market prices for the next seven years.
"The seven year beer supply agreement is good for Scottish Courage," Mr Froggatt said.
S&N said it would use the cash to pay off debt, shoring up its financial position as it continues to expand into high growth markets in eastern Europe and Asia.
The company has borrowed heavily to fund recent international acquisitions, including Kronenbourg in France and Finnish drinks firm Hartwall.
Spirit - backed by private equity firms Texas Pacific Group and CVC Capital Partners as well as US investment bank Blackstone - saw off rival bids from pubs group Laurel and Japanese bank Nomura.
"I am confident that the business will continue to prosper as part of the new group, which will be the leading managed pub business in the UK," said Spirit chairman Tony Campbell.
The deal has transformed Spirit into the UK's biggest managed pubs business, with a total estate of about 2,500 premises..
In the City, S&N shares were 2.5p higher at 365p in early trade.
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