Solihull-based pubs giant Enterprise Inns yesterday held out the prospect of further cash returns for shareholders after it sold a chunk of its estate to the privatelyowned Admiral Taverns group for £318.1 million.
Enterprise, which has already bought back £320 million worth of stock this year, had already indicated that it would extend its buy-back programme into 2006-07 and some analysts were looking for £450 million to £500 million to be returned to shareholders.
However, yesterday's sale of 769 pubs to Admiral - one of Enterprise's biggest disposals to date - could see the buy-back figure reach £500 million or more.
"In the short-term, the proceeds from the sale will be used to reduce debt, but there is no doubt that it will strengthen our cash position and enhance our ability to return more cash to shareholders," said Enterprise chief executive Ted Tuppen.
Following the disposal, Enterprise Inns will have around 7,700 pubs in its estate and will still be the UK's second largest tenanted operator behind Burton on Trent-based Punch Taverns, which has around 9,500 pubs.
For Admiral, which is run by the Landesberg and Rosenberg families, the transaction will propel it into third position with around 1,825 tenanted outlets. Yesterday, the group said it would continue to look for further value enhancing deals, although it ruled out any stock market listing.
"There are no current plans to go public," Gary Landes-berg said. "We have a strong team and a sound financial model backed by quality freehold assets. Today's deal will transform the business and improve the overall profitability of the group."
Shares in Admiral Group were up 3.5p at 664p.