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Greene King - Large disposal of non-core pubs

June 2014

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • GNK
  • Price:
  • 838p
Greene King has sold 275 non-core pubs from its pub partners (tenanted pubs) division for £75.6m, while the buyer has agreed to continue taking its beer for three more years. The disposed pubs generated EBITDA of £12.4m last year, implying an exit multiple of 6.1 times. Although the deal represents an £18.2m loss on their combined book value these are the type of smaller under invested “wet” led pubs, which have seen gradual declines due to the smoking ban and consumers’ preference to go to family friendly pubs, which provide decent food. Post disposal, Greene King will have 925 outlets in pub partners, which generated profits of 26% in FY’13 and intend to shrink it further to just 750 out ...

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