Heineken to buy Britain's Punch pubs for $500 mn

Dutch brewing giant Heineken announced Thursday it is teaming up with Patron Capital to buy ailing Punch Taverns, hoping it will be able pull profitability from the age-old but struggling British pub tradition.

The Amsterdam-based brewer together with Patron will buy more than 3,000 pubs across Britain at a total cost of 402.7 million pounds (481 million euros, $502 million), Punch Taverns said.

Under the terms of a "back-to-back" deal, Heineken is to acquire around 1,900 pubs at a cost of 305 million pounds, Heineken added in a statement, while Patron will get the rest.

Heineken already owns 1,049 leased and tenanted pubs in Britain through its Star pubs and bars business since 2008.

The world's number two brewer, which owns brands such as Strongbow, Bulmers, Foster's and John Smith's, said there is a "compelling strategic rationale for enlarging its existing pub business through the acquisition."

"Heineken considers pubs to be an integral part of British culture and that high quality, well invested pubs run by skilled and motivated operators will continue to prosper," it added.

The latest deal will "strengthen Heineken UK's exposure to sustainable revenue source from rental income" and a "strong platform to improve visibility" for its beer and cider brand sales.

The deal, expected to be completed by the first half of next year, subject to regulatory approvals, will see Heineken become Britain's third-largest pub business, it said.

Founded in the 19th century, Heineken produces and sells more than 250 brands including Desperados tequila-flavoured beer, Sol and Strongbow cider and employs about 73,000 people around the world.

The debt-laden Punch Taverns has not recorded annual revenue growth since 2007, Bloomberg news agency reported.

Stock has fallen 97 percent since a peak that year as Britain's pubs struggle with cheaper supermarket liquor, a smoking ban and restrictive drinks-purchasing agreements.