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Greene King receives £4.6bn buyout bid

The offer is the latest in several M&A deals within the UK leisure industry
Greene King receives £4.6bn buyout bid

Directors at Greene King (GNK) are unanimously recommending that shareholders accept an 850p a share cash offer from CKA Group, a Hong Kong-listed investor, via its subsidiary 'CK Bidco'. This values the pub group’s issued share capital at £2.7bn, giving the group an enterprise value of around £4.6bn or 9.5 times Greene King’s cash profits of £482m for the year to April 2019.

IC TIP: Hold at 849p

Greene King chairman Philip Yea called the deal an opportunity for shareholders to “realise value for their investment at an attractive premium”. George Colin Magnus, non-executive chairman of CK Bidco, believes that the UK pub and brewing sector will continue to be an important part of British culture, adding that Greene King’s strong cash-flow generation and real estate backing make it “well positioned to capture the opportunities that lie ahead”. CKA already owns a small portfolio of freehold pubs, all of which are leased to Greene King.

The offer price represents a 51 per cent premium to the 563p closing price the business day before the deal was announced, or a 42.8 per cent premium to the adjusted three-month volume-weighted average price of 595p.