Scottish sells pubs and hotels to Spirit

SCOTTISH & Newcastle today unveiled the £2.5bn sale of its pubs and budget Premier Lodge hotels to a venture capital consortium led by the Spirit pubs group.

The deal marks S&N's exit from retailing, leaving it to focus on its international beer brands, including Kronenbourg, Foster's and, on the Continent, Baltika.

Spirit is backed by a consortium led by Texas Pacific - which backed its former parent company Hugh Osmond's Punch Taverns - Blackstone, CVC and Merrill Lynch's private equity arm.

S&N has agreed to supply drinks to the chain under terms that will slice £14m a year off the brewer's profits, and to fund the division's pension liabilities fully at a cost of £32m. After this and auction expenses, net cash proceeds for S&N will be £2.43bn.

Spirit, headed by Karen Jones, will now become the largest managed pubs owner in the UK, having fought off stiff competition from a host of rival bidders. Runners-up included Laurel Pub Company and Nomura International.

Brands under the S&N estate include Chef & Brewer, Premier Lodge and T&J Bernard.