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21 July, 2006 - 12:26 By Staff Reporter

Whitbread agrees £500m pub/grub sale

Luton based Whitbread has agreed to sell a large chunk of its pub estate for just under half a billion pounds.Luton based Whitbread has agreed to sell a large chunk of its pub estate for just under half a billion pounds.

The leisure and hospitality group has shaken on a deal that sees around 240 pub restaurants being bought by Mitchells & Butlers for £497m.

The consideration is payable in cash and completion of the transaction is expected on July 28.

Whitbread said it would initially use the proceeds to pay down debt while it reviews its "options for creating shareholder value."

Alan Parker, Whitbread chief executive said: "We can now focus on operating those sites that combine a pub restaurant with a Premier Travel Inn - a combination that has produced some of the highest returns in the industry. "We will also be progressing our programme of adding around 3,000 new rooms on our existing pub restaurant sites. We see substantial opportunities for further profitable growth from these combined sites.”

The aggregate net book value of the disposal estate was £280.9m and made a profit contribution of £37.5m in Whitbread's last year-end results.

Notwithstanding the acquisition, Mitchells & Butlers is currently undergoing a refinancing that will see £500m returned to shareholders.

Founded in 1742, Whitbread manages a range of brands including Premier Travel Inn, Brewers Fayre, Beefeater, Costa, T.G.I. Friday's and David Lloyd Leisure.

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