Greene King grabs 'Morse' pubs

BREWER Greene King has pulled off a deal to buy pubs group Morrells of Oxford for £67m, confirming its status as a major player in the South of England. Morrells owns 57 managed and 50 tenanted pubs in and around Oxford, some of which were a favourite haunt of TV's maverick copper Inspector Morse, played by the late John Thaw.

The deal includes £30.4m of debt. However, Morrells' ale brands including Graduate and Varsity, brewed under contract by Dorchester brewer Thomas Hardy, have been retained by the vendor Michael Cannon, who paid £48m for the chain three years ago. Greene King chief executive Tim Bridge said: 'We did have a look at the ale brands and the free trade business but we preferred to buy the pubs. We weren't prepared to pay the price they wanted.'

Cannon used to own the Magic Pub Company and Devenish and has amassed an estimated personal fortune of £120m.

The Morrells pubs produced an operating profit of £6m last year and Greene King said the deal should lift earnings next year. Bridge said: 'The Morrells pubs will integrate well into our managed and tenanted estate and provide a very good strategic fit for us. Our brewing and brands division will also gain through the distribution of our ale brands throughout the estate.'

Greene King brews beers including Old Speckled Hen and Abbot Ale at Bury St Edmunds, Suffolk. Following recent acquisitions, including Old English Inns for which it paid £102.6m last September, it owns 1,800 pubs.

Bridge said Morrells had been investing in the managed estates but that 50 tenanted pubs would benefit from some attention now. 'They should produce more profits in the next couple of years as we can draw on better buying power.' Bridge, said to have his eye on Eldridge Pope, said he had no specific target for acquisitions but was aiming for 10% annual growth in earnings.

Teather & Greenwood analyst Nigel Popham said: 'It's a small deal but it is financially, geographically and strategically very sensible for them. Greene King has increasingly been moving across the South of England. It's a relatively modest transaction for them though, they have the scope to make further deals.'