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.
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.
