July 31, 2008 / 8:26 AM / 11 years ago

M&B and Whitbread confirm details of asset swap

A Mitchells & Butlers pub is seen in this undated handout photo. REUTERS/Handout

LONDON (Reuters) - Pub operators Mitchells & Butlers (MAB.L) and Whitbread (WTB.L) on Thursday confirmed a deal through which M&B will buy 44 pub restaurants from its rival in return for 21 Express by Holiday Inn hotels.

Whitbread said the deal to acquire the hotels, which incorporate 1,245 rooms, will be earnings neutral in 2009/10 and earnings enhancing thereafter.

The 44 pubs acquired by M&B are currently trading under the Brewers Fayre and Beefeater brands. M&B said they would be converted to its own brands and formats and it expected significant sales and profits uplifts.

In order to assist in funding the capital expenditure required for the conversions and reduce debt levels, M&B said it intended to review opportunities for sale and leaseback financing on the acquired freehold sites.

The 21 Express by Holiday Inn hotels will be converted to Whitbread’s Premier Inn brand and will take the total number of Premier Inn hotels in the UK to 550 offering 38,000 rooms.

Whitbread said planning consent had been granted to extend five of the 21 acquired hotels, adding a further 200 rooms.

It has also identified additional opportunities to extend the acquired estate to over 1,500 rooms, subject to planning approval, taking it closer to its target of creating 4,000 new Premier Inn rooms in 2008/9.

The pub restaurants being sold are at sites on which it is not possible for Whitbread to pursue its strategy of developing a Premier Inn alongside the pub.

At 9:10 a.m., shares in Whitbread were down 2.6 percent at 1,108 pence, while M&B’s were down 4.3 percent at 244-3/4 pence.

Reporting by Matthew Scuffham, editing by Will Waterman

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