Mitchells & Butlers (M&B) has acquired a rival pub operator for £266 million.
The Birmingham-based company, which owns brands such as Harvester and O'Neills, has today confirmed a deal to buy Orchid Group following the announcement last month that it had entered into talks .
M&B said today it had acquired the majority of the activities of the Orchid Group including 173 pubs, 158 of which are freehold, and its head office.
The deal expands M&B's share of the growing UK branded pubs and restaurants market in line with its strategy of moving away from wet-led pubs.
M&B group, which is headquartered in Fleet Street, also contains well-known names such as Toby Carvery, Sizzling Pubs, All Bar One and Browns.
The listed group told the London Stock Exchange it planned to convert 96 of Orchid's pubs to M&B brands and formats over a two-year period at a total investment of £35 million.
Cost savings and synergies of at least £6 million per year are expected to come as a result of the takeover.
Chief executive Alistair Darby said: "The acquisition of the majority of the Orchid estate will accelerate M&B's growth and present significant opportunities for value creation through cost savings, synergies and the conversion of Orchid pubs.
"We greatly look forward to welcoming the Orchid employees who will transfer as a consequence of this acquisition."
The consideration of £266 has been settled in cash and is subject to an adjustment of up to £2 million depending on the level of working capital and cash in the business at completion.
M&B has funded the majority of the deal using existing cash resources in addition to putting in place unsecured facilities totalling £150 million, provided by existing lenders.
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