Admiral Inns has muscled its way into the top three pub operators in the UK with the purchase of 869 pubs from Punch Taverns for £326m.
After its 12th acquisition in four years, Admiral now has more pubs in its portfolio - 2,700 - than traditional heavyweights such as Mitchells & Butlers, Greene King and Marston's.
The pubs covered by the deal have an average profitability of £29,000 per pub, compared with the Punch average of £55,000, but Admiral chief executive Gary Landesberg said the company saw room for improvement.
"Our strategy is to acquire freehold tenanted pub assets where we believe there is the potential to improve their performance and to enhance their offering," he said. "We have acquired freehold pubs that will contribute to building a sustainable business for the long term."
Francis Patton, customer service director at Punch, said the sale would raise its average profitability in a market where its rivals, such as Marston's - which has about 300 pubs up for sale - were trying to do the same.
"Our aim is to have one of the highest-quality estates in the country," he said. "Last year we bought Spirit and we ended up selling some [of the estate] off. Transferring part of the estate across to leased raised our overall business.
"Of the group of 869 [sold to Admiral], although they are fine pubs, they are smaller and less profitable ones," Patton added. "They were lower than the average in Punch and they were more prominently drink-led than food-led."
Patton said Admiral, which made the initial approach, would run the pubs in a way that could be more effective at the lower end of the market.
By Christopher Walton