Hong Kong's CKA inks €2.95b deal for Greene King pub group

Hong Kong property firm CKA Group has agreed to acquire UK pub and beer group Greene King for £2.7 bn (€2.95 bn), including a portfolio of 2,700 pubs, restaurants and hotels across the country. 

Greene King's directors have advised shareholders to accept the cash bid of 850 pence per share. The offer values the company's share capital at £2.7 bn, or £4.6 bn, including debt. It represents a premium of around 5.1% on the closing price of Greene King's shares as of August 16, and a premium of 42.8% to the average share value over the past three months.

The bid for the 220-year-old firm capitalises on the growing popularity of the brewer's Greene King IPA in mainland China, after the country's president Xi Jinping was pictured drinking the beer during a state visit to the UK in 2015. CKA said that it also reflected its faith Britian's enduring pub culture.

'CKA's strategy is to look for businesses with stable and resilient characteristics and strong cash flow generating capabilities. The UK pub and brewing sector shares these characteristics and we believe that this sector will continue to be an important part of British culture and the eating and drinking out market in the long run,' said George Colin Magnus, non-executive chairman designate of CKA's bid vehicle.

'Greene King, being a leading integrated pub retailer and brewer with strong real estate backing, is well positioned to capture the opportunities that lie ahead,' Magnus added.

CKA's chairman, Victor Li Tzar Kuoi, is part of Hong Kong's richest family, which holds considerable interests in the UK retail trade. His father, Li Ka-shing, controls pharmacy chain Superdrug and mobile operator Three.

'We are proud of our track record in the UK and our philosophy is to support strong management teams and provide investee companies with access to patient capital in order to create sustainable long-term value,' Magnus noted.

Prior to the bid, CKA already owned 162 pubs in the UK which it was leasing to Greene King. CKA also holds 5 Broadgate in the UK, the Chelsea Waterfront development, Belgravia Place and Royal Gate Kensington.

Philip Yea, chairman of Greene King, said: 'The Greene King board is confident in the long term prospects of the business but believes this offer represents a good opportunity for shareholders to realise value for their investment at an attractive premium, while also ensuring the future success of Greene King for employees, partners, customers and suppliers. We are therefore unanimously recommending it to our shareholders.'

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