Li Ka-shing’s CK Asset offers to pay US$3.27 billion to buy Greene King, operator of 2,700 pubs, restaurants and hotels in UK

Georgina Lee

CK Asset Holdings, the flagship of Hong Kong’s richest man Li Ka-shing, is paying £2.7 billion (US$3.27 billion) to buy a string of British pubs, doubling down on its UK investments in its biggest overseas bet in two years.

CK Asset is proposing to pay 850 pence (HK$80.8) per share to buy out the entire issued capital of Greene King, which operates 2,700 pubs, restaurants and hotels in the UK, after having bought 2.9 per cent stake through a wholly owned subsidiary, according to a Monday statement to the Hong Kong stock exchange.

CK Asset Group already owns a small portfolio of pubs in the UK, all of which are leased to Greene King.

The cash consideration presents an enterprise value multiple of 9.5 times Greene King’s earnings before interest, taxes, depreciation and amortisation, which was at £482 million for the 52-week period up to April 28, 2019.

Hong Kong tycoon Li Ka-shing at a news conference announcing CK Hutchison Holdings company results in Hong Kong on March 22, 2017. Li retired from active business in May 2018, handing over the chairmanship of CK Asset and CK Hutchison to Victor Li, the elder of his two sons. Photo: REUTERS

“The group is a long-term and strategic investor in stable, profitable and cash flow generating businesses that benefit from real estate backing. The company believes that the UK pub and brewing sector shares these characteristics,” CK Asset said.

The Greene King purchase is the CK group’s biggest bet since the US$5.6 billion purchase of Australian power provider Duet Group in 2017, according to data compiled by Bloomberg.

Victor Li Tzar-kuoi, chairman CK Hutchison Holdings and CK Asset Holdings Limited, during the announcement of the corporate results on 21 March 2019. Photo: SCMP/Jonathan Wong

Greene King operates under three trading divisions namely “pub company”, “pub partners” and “brewing and brands” across England, Wales and Scotland. For the 13 months ended April 2019 its net profit was £120 million and had revenue of £2.22 billion.

CK Asset said it will also request approval from the London Stock Exchange and other regulators to delist the shares. The deal is subject to shareholders’ approval and other conditions.

Europe already accounts for the lion’s share of the business empire founded by Li, contributing to 55 per cent of first-half earnings at CK Hutchison Holdings, which owns a myriad of businesses from retailer A S Watson Group to telecommunications and container ports. The UK contributed to 22 per cent of CK Hutchison’s earnings in the first six months.

CK Asset’s shares rose by as much as 3 per cent to an intraday high of HK$56.70, before closing the day at HK$55.50. CK Hutchison’s shares rose 0.2 per cent to HK$70.10.

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