Mitchells & Butlers pays £500m for Whitbread's pub restaurant estate

Managed pub giant Mitchells & Butlers (M&B) has won the race for Whitbread's pub-restaurant estate, put up for sale in April.

M&B will pay Whitbread £497m for 239 pub-restaurant sites, which will see it take a stranglehold on the high-growth residential dining market.

The company expects its purchase to significantly enhance profits by the second year of ownership.

M&B will rebrand the pubs, mainly Beefeater and Brewers Fayre sites, within two years.

Conversions will be to M&B's Premium Country Dining, Toby and Vintage Inns, and Ember Inns and Sizzling Pub Co brands.

Tim Clarke, M&B chief executive, said: "With this transaction, we have secured 239 of the best pub restaurant sites in the UK. The acquisition represents exceptional value compared with greenfield site developments."

Around 95% of the properties are freehold or long leasehold, and around half are in the South-east and South-west of the UK.

Despite the size of the deal, M&B still plans to return £500m to shareholders.

Private equity company GI Partners, Laurel Pub Company and Mill House Inns were reported to have made moves to secure the Whitbread pubs.

Whitbread itself said it would continue to concentrate on its remaining dual sites, which combine pub restaurants such as Brewers Fayre or Beefeater with its budget hotel offering Premier Travel Inn. The company intends to add up to 3,000 new rooms at these "highly profitable" locations.

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By Chris Druce

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