Greene King (LON:GNK), the UK pub operator, has agreed a deal to buy four pub restaurants from rival group Punch Taverns (LON:PUB) for a total consideration of £5.3m. The deal is being financed from the proceeds of Greene King’s April 2009 £207.5m rights issue, which has already funded the acquisition of 23 pubs from Punch in the last 12 months for a total of £51.6m as well as seven pubs from Mitchells & Butlers (LON:MAB) in December 2009. Shares in the company nudged up slightly to 388p on the news.

These latest pub restaurants are food-led, destination sites in Aberdeen, Northampton and Nottingham and meet the strict strategic and financial criteria set out at the time of the company’s rights issue. In the year to August 2009, these sites generated EBITDA of £342,000. The company said it expects, following targeted capital investment and operational synergies from integration, that the sites will return to more normalised, historic trading levels, equating to c. 7x EBITDA. Following this acquisition, from both targeted packages and single sites, Greene King will have invested £100m of the rights issue proceeds in acquiring and improving 34 high quality, freehold, retail sites and repurchasing below par debt.

Rooney Anand, Greene King’s chief executive, said: “We are very pleased to have acquired these sites. They are freehold retail sites in great locations currently trading below their potential. We expect to convert the sites into our market-leading pub restaurant brands, Hungry Horse and Eating Inn, further strengthening our position in the UK eating out market.”

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