Birmingham-based pubs group Mitchells & Butlers is to to acquire 44 pub restaurants from Whitbread in an assets swap.
Under the terms of the agreement,Whitbread will acquire 21 of Mitchells & Butlers’ lodge sites (1,245 rooms), currently trading under the Express by Holiday Inn brand, in exchange for 44 standalone Whitbread pub restaurant sites, currently trading under the Brewers Fayre and Beefeater brands.
The exchange has been made on the basis of equivalent EBITDA of around £9 million from both the hotels and the pub restaurants and a valuation of some £78 million for both sets of assets to be exchanged.
M&B, which has its headquarters in Fleet Street, Birmingham, said that the Whitbread pub restaurant sites will be converted to Mitchells & Butlers’ industry leading brands and formats with significant sales and profits uplifts expected.
The transaction is expected to complete on September 19.
M&B said that in order to assist in funding the capital expenditure required for the conversions and to further reduce group debt levels, it intends to review opportunities for sale and leaseback financing on thecquired freehold sites.
Tim Clarke, chief executive of Mitchells & Butlers, said in a statement: “This deal drives further consolidation in top end managed houses and demonstrates our ability to create value from the non-core assets. Our brands can add a lot of value to these pub restaurant sites as we have shown with previous acquisitions.”