Greene King has leapfrogged Wolverhampton & Dudley Breweries after buying Scotland's largest independent regional brewer in a £187 million deal.

Belhaven, which brews Belhaven Best and distributes Tennent's and Stella Artois, reached agreement that will give Greene King "instant scale" in the Scottish market.

The 625p-a-share offer, which is subject to approval by shareholders, is expected to create cost savings of around £3 million in the first full year of ownership, rising to around £5 million over the following two years.

It will save money on buying and the cross-selling of products and will also allow the pair to share management and operational expertise.

The deal will also add about 300 Belhaven pubs to Greene King's estate, taking it to 2,334 and pushing it ahead of W&DB to become Britain's third-biggest pub owner.

The combined group will have annual sales of around £850 million.

Greene King plans to raise around £47 million through issuing new shares to help fund the deal.

Belhaven - which was founded in 1719 - will keep its name, brands and brewery following the acquisition by the East Anglia-based brewer of Old Speckled Hen and Abbot Ale.

The takeover marks the latest stage in the consolidation of the sector, coming just a month after Greene King completed a £46 million deal for family-run brewer TD Ridley, involving the closure of its brewery.

Earlier in the year, W&DB snapped up Lake District brewer and pubs group Jennings Brothers for £67 million.

Greene King said being part of a larger group would open up new markets for Belhaven's products.

Chief executive Rooney Anand said: "It is an opportunity for us to gain immediate scale in the important Scottish market."

The company said it had concluded that the Scottish smoking ban due next year may result in a "significant" reduction in Belhaven's shortterm profitability - a significantly greater impact than England's expected 2008 ban would have on Greene King.

"This has been fully factored into Greene King's appraisal and valuation of Belhaven," it said.

However, analyst Greg Feehely at Altium Securities said he could not see how the price reflected the risk.

"We don't like this deal at all," he said.

"They paid a full price for Ridleys, but this is the highest price we've seen yet, and with the most immediate downside.

"Greene King shareholders are assuming all of the downside of the smoking ban."

Since 1996, Greene King has acquired more than 1,600 pubs in eight transactions with a total value of more than £1.3 billion.

The Campaign for Real Ale expressed concern at the deal, saying there were now only 30 independent brewers left in the country, and warned other takeovers may follow.

It warned that Wolverhampton & Dudley would now feel "a little bit in second place" and was likely to try to snap up another family brewer.

Greene King also updated on current trading. It said trading performance for the 12 weeks to July 24 had been positive and in line with expectations.

Total like-for-like sales were up 1.2 per cent, or 2.6 per cent excluding the "Euro 2004 effect".