UK, London: British regional brewer and pubs company Greene King Plc is in talks to buy a part of the Laurel Pub estate, the company confirmed on July 7, adding it did not plan to issue new shares to fund a deal. Sources close to the auction told Reuters on July 6 that Greene King, the brewer of Abbot Ale and Old Speckled Hen and owner of nearly 1,700 pubs, was set to enter exclusive talks this week to buy 432 Laurel community or neighbourhood pubs for over 600 million pounds ($1.1 billion).

Laurel, owned by Deutsche Bank's private equity arm and managed by private equity group MidOcean Partners, put its community pubs up for sale earlier this year to focus on its 177 town centre outlets such as Hog's Head and Casa chains. Greene King shares rose to a fresh high of 1,062 pence and were up 3.9 percent at 1,061p by 0940 GMT on the confirmation it had beaten three rival bidders and that group earnings would not be diluted by any issue of new equity.

"Greene King confirms that it is in advanced discussions which may or may not lead to a transaction. Greene King has no current intention of issuing new equity in connection with such a transaction were it to proceed," a group statement said. Analysts said Greene King could gain cost savings of over 15 million pounds a year from merging the two pub estates, and could enhance earnings per share in the first full year.

Laurel is hoping the pubs will fetch up to 450 million pounds, while if a 2002 sale and leaseback of a number of the pubs is unwound -- which Greene King favours - the price could go as high as 660 million pounds, the sources said. Laurel hopes to complete the deal by the end of July.

Formed in 2001 for the buy-out of the old Whitbread pub estate, Laurel received bids on Friday from brewing and pubs group Wolverhampton and Dudley Breweries Plc, fast-growing pub group Punch Taverns Plc and private-equity-owned pubs group Spirit, as well as Greene King. The Laurel auction is being handled by investment bank Rothschild.

09 July, 2004