Greene King rides high on back of Cloverleaf deal
Shares in Greene King climbed higher today after the pub group announced the takeover of carvery specialist Cloverleaf.
Greene light: The City welcomed the Greene King deal.
Greene King shares were 6% higher, up 27.5p to 476p, after the £55.8m deal was confirmed.
The deal has added another 12 restaurants to Greene King's existing estate, which includes the Hungry Horse carvery chain, as well as Loch Fyne sea food restaurants, Scottish business Belhaven and the Old English chain.
Greene King plans to pump in around £25m to finance 10 new Cloverleaf openings within two years as part of a strategy to focus on food-led sites.
Cloverleaf - founded in 2004 by former Whitbread executives Gary Douglas and John Winder - operates across the north and midlands.
Details of the acquisition emerged as Greene King reported back on robust trading despite snow disruption ahead of Christmas.
Like-for-like sales rose 3.9% across its Greene King retail estate, with sales up 10.3% at Hungry Horse carveries and 3.6% ahead at Belhaven over the 38 weeks to January 23. Food sales rose 8.2% in its Greene King retail arm, according to the group. Greene King's tenanted pubs saw like-for-like earnings rise by a more modest 0.6%, but it said all businesses were trading well after a good January.
It follows recent upbeat news from rivals Marston's and All Bar One owner Mitchells & Butlers as the industry benefited from a strong recovery from the snow disruption and a concerted push into food business.
Greene King revealed plans last July to expand its food-led retail business - managed pubs - and reduce its tenanted sites over the next three to five years.
It now has 900 managed pubs following the Cloverleaf takeover and more than 1,500 tenanted or leased sites.
Greene King also has a brewing business, which makes ales including Greene King IPA cask ale and Old Speckled Hen.
Brewing volumes fell 3.3% against a 7.6% drop in the wider market over the 38-week period.
Greene King said the Cloverleaf deal was an 'exciting acquisition' for the group.
'Cloverleaf operates large, freehold, quality pub restaurants, across the north of England and the Midlands, and is well positioned to capitalise on the growing carvery market,' it said.
'It is growing strongly both organically, with like-for-like sales growing ahead of our existing retail business, and through additional sites.'
Shares rose 5% after today's trading update and acquisition news, with analysts at Numis Securities upping profit forecasts for the current financial year and following two years.
They are now pencilling pre-tax profits between £136m and £138.9m for the year to May, up from £123m a year earlier.
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