Smoking ban not reason for sell-off, says UK pub giant

The UK's biggest pubs company, Punch Taverns, today sold a collection of 869 pubs to rival Admiral Taverns.

A spokeswoman for the Staffordshire-based company said the move was not driven by the forthcoming smoking ban in England - recently introduced in Wales - but was a strategic move as it looked to increase the overall quality of its estate.

Punch disposed of the estate of leased and tenanted pubs, largely in England and Wales, for £326m (€479.89m), which it said it will use to reduce the company's debt.

Punch, which replaced Gallaher in the FTSE 100 Index this week, said the estate consisted of smaller, less profitable pubs from the lower end of its portfolio and were largely drinks-focused venues.

The spokesperson said that Punch was prepared for the smoking bans following the divestment of more than 520 pubs since December 2005, including 203 sites to Admiral, while it had also worked on a "smoking solution" for all of its 9,300 venues.

A number of major pub companies, including Enterprise Inns and Marston's, have been working to trim down their pub assets ahead of the nationwide ban, whilst also increasing their food offerings as a way to offset any decline in sales from smokers who choose to drink at home.

The deal represents the largest ever pubs purchase by Admiral, taking its estate to 2,700 pubs in England and Wales, and will see it become the third biggest pubs group. It was reported today that Admiral may look to cash in on the property value of some of the venues.

Since its foundation in March 2004, the company has worked to quickly build up its estate of freehold pubs and invest in improving performance at the businesses.

During the last two and a half years, Admiral has bought 1,205 sites from Punch, whilst it also picked up 769 tenanted and leased pubs from Enterprise Inns in September and 155 from Greene King in November.

Gary Landesberg, chief executive of Admiral, said: "We have acquired freehold pubs which will contribute to building a sustainable business for the long term."

Admiral is an independent company jointly owned by the Landesberg and Rosenberg families.