British pubs operator Greene King has agreed to a £4.6 billion (US$5.6 billion) bid from a Hong Kong-listed company founded by Li Ka-Shing.
The offer from CK Asset, whose founder ranks among Asia’s best-known entrepreneurs, values shares in the brewer of Old Speckled Hen and Abbot Ale at 850 pence each or £2.7 billion in total, a premium of about 51% to their Friday close, CGTN.com reported
Including debt, the deal value amounts to 4.6 billion British pounds, though some analysts said the cash value should be higher.
“We would see 950p per share … as a more attractive exit price to secure shareholder consent,” said Shore Capital analysts, noting that underlying trading had improved lately.
CKA already owns a near 3% stake in Greene King, also owner of the Chef & Brewer and Hungry Horse chains and whose shares jumped 51% to match the bid price, the report said.
The proposed takeover comes after Greene King, with 2,700 pubs, restaurants and hotels across England, Wales and Scotland and employs 38,000, has like others struggled with a rise in the minimum wage and a move away from pub drinking among younger Britons. Greene King was founded in 1799.
Britain’s looming exit from the European Union risks denting the economy but the weakness of sterling has made it cheaper for foreign buyers to snap up UK assets.
More than 11,000 pubs shut in the UK in the last decade, a fall of almost a quarter, a 2018 analysis by the Office for National Statistics had revealed.
However, Greene King, which replaced its long-time boss last year, in June posted a higher than expected 1.6% rise in annual adjusted profit before tax to £246.9 million.
“CKA’s strategy is to look for businesses with stable and resilient characteristics and strong cash flow generating capabilities,” George Colin Magnus, chairman designate of the CKA unit in charge of the acquisition, told CNN. “The UK pub and brewing sector shares these characteristics.”
CK Asset Holdings is one of Hong Kong’s top property developers, CNN reported. Li has served as a senior adviser since 2018, when he retired from the business he built. His family and trust still owns just over 32% of the company.