BRUSSELS/LONDON: Royal Bank of Scotland has sold its UK tenanted pub business to Heineken, the world's third-largest brewer, for 422 million pounds ($661.8 million) to further its exit from non-core businesses following its state rescue.
RBS, 83 percent owned by the UK government after its bailout during the credit crisis, said the sale was in line with its strategy to reduce non-core assets, which totalled 105 billion pounds at the end of September.
RBS acquired the 918 pubs, one of which is the Punch Bowl in London partly run by movie director Guy Ritchie, in 1999.
The deal will also make Heineken one of the UK's leading pub operators, with 1,380 premises, adding to the Globe chain it took control of following their 2008 acquisition with Carlsberg of Scottish and Newcastle.
Tenanted pubs are run by publicans who pay the company rent and rely on it for their beer supplies. They have generally fared less well during the economic downturn than managed pubs, which are run directly by the operating company and generally have greater freedom on pricing.
Heineken sees them as a key channel to sell its lagers such as Foster's and Heineken itself, Europe's top-selling beer, as well as ciders Strongbow and Bulmer's, which are growing despite a stagnant or declning beer market.
Heineken said the pubs it was buying were of high quality and had outperformed the market. The former Globe pubs were also now profitable and outperforming the market, it said.
Heineken said it expected the deal to add to earnings immediately and to enhance value in the first year after completion. It is set to take a one-off pre-tax charge of 28 million pounds in the fourth quarter of 2011.
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