UK: Pub and beer company Greene King sold to Hong Kongs richest family
Hong Kongs richest family is to buy UKs 220-year-old pub and beer company Greene King for £2.7 bln, the equivalent of £1 mln for every one of its 2,700 pubs, restaurants and hotels, The Guardian reported on August 19.
The deal adds to the vast stable of UK businesses that are part of the sprawling global empire controlled by Li Ka-shing, the 91-year-old multibillionaire who also owns pharmacy chain Superdrug and mobile operator Three.
It also marks the second time this year that a time-honoured British brewer has been snapped up by an Asian buyer, after Fullers was sold to Japanese drinks giant Asahi for £250 mln.
In a statement to the stock market, Suffolk-based Greene King said it had agreed to a takeover by CKA Group, whose chairman Victor Li Tzar Kuoi is Lis eldest son.
The deal will see CKA capitalise on a surge in the popularity of the brewers flagship beer Greene King IPA in mainland China. Sales soared there after President Xi Jinping was pictured drinking a pint of the brew with then prime minister David Cameron during a state visit in 2015.
The cash bid, which Greene Kings directors have advised shareholders to accept, values the company at £2.7 bln, or £4.6 bln including the debt that CKA will be taking on.
CKA, a property business based in Hong Kong but incorporated in the Cayman Islands, said its bid was founded on its confidence in Britains enduring love of pubs.
The number of pubs has been in long-term decline but the pace at which their numbers are declining has slowed in 2019.
Greene King traces its history back to 1799, when it was founded in the sleepy Suffolk town of Bury-St-Edmunds by 19-year-old Benjamin Greene.
By contrast, CKA is part of a vast empire of global business interests headed by Li Ka-shing, who is estimated to be worth $29.4 bln, making him the worlds 30th richest man.
CKA focuses on property and investments, owning a host of prestigious addresses and stakes in utility companies.
Its properties include 5 Broadgate, the UK headquarters of Swiss bank UBS, the Chelsea Waterfront development and luxury London apartment blocks Belgravia Place and Royal Gate Kensington.
It also owns 20% of rolling stock firm UK Rail, 16% of Northumbrian Water and 12% of Wales and West Gas Networks, as well as 162 pubs that it was already leasing to Greene King, in which it already held a 2.9% stake.
The Li family also owns electricity distribution firm UK Power Networks, which feeds electricity to 18m people, or 28% of the UK population.
CKAs strategy is to look for businesses with stable and resilient characteristics and strong cash flow generating capabilities, said George Magnus, who chairs the takeover vehicle the Hong Kong firm is using to complete the deal.
The UK pub and brewing sector shares these characteristics and we believe that this sector will continue to be an important part of British culture in the long run.
Nick Mackenzie, chief executive of Greene King, said: Greene King has a well-invested estate in prime locations, leading brands, a rich history and a talented team of 38,000 people serving millions of customers across the country every week.
Nik Antona, national chairman of the Campaign for Real Ale said the sale of Greene King was very concerning for our beer scene.
He added: We hope that Greene King will continue its operations as normal without any disappointing changes. We will be calling on the new owners to retain the current pub portfolio to safeguard thousands of pubs and jobs across the country.
British brewers have proved particularly attractive for foreign buyers, who have pounced on traditional family operations such as Greene King, as well as the newer breed of so-called craft breweries.
Fuller, Smith & Turner accepted a £250 mln offer for its entire drinks business from the Japanese beer group Asahi, including its flagship London Pride ale, earlier this year.
The company, which had three relatives of the Victorian brewing barons John Fuller, Henry Smith and John Turner on its board at the time of the deal, said it had taken the decision to quit beer after 174 years to concentrate on running pubs and hotels.
So-called craft brewers have also proved attractive to foreign buyers, particularly multinational drinks companies that have swooped on brands such as Camden Town, Beavertown and Meantime, capitalising on the growing popularity of smaller breweries.
The trend has sparked concern within the beer industry that big companies are buying out independent competition, compromising the integrity of the so-called craft revolution.
SAB Miller kicked off the trend in 2015 by buying London brewer Meantime for £120 mln. The brand later had to be sold to Asahi as a condition of SABs Megabrew takeover by AB InBev, which had bought north London brewer Camden Town for £85m in 2015.
In 2017, Carlsberg snapped up London Fields Brewery, which was put up for sale after its founder was charged with tax fraud.
Dutch multinational brewer Heineken paid £40m for a minority stake in fast-growing Tottenham brewery Beavertown last year.
More recently, Australias Lion bought highly-rated Huddersfield-based brewer Magic Rock, a year after buying Bermondsey-based Fourpure, while Molson Coors bought Hop Stuff.
Other beers clothed in craft branding, but owned by global firms, include Goose Island, Blue Point, Hop House 13, Blue Moon, Sharps Doom Bar and Lagunitas.
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