Heineken buys entire RBS Galaxy pub estate for £412m

Royal bank of Scotland (RBS) has sold its entire Galaxy estate, a portfolio consisting of 918 pubs, to Heineken in a deal worth £412m.

The deal is the biggest of its kind in almost a decade and will add to Heineken’s existing state of 462 pubs. RBS, which initially acquired the pubs in 1999, said the sale was in line with its strategy to reduce non-core assets.

Heineken subsidiary Scottish & Newcastle (S&N) has always managed the tenanted pub group for RBS. It will receive £10m from Heineken to wind-up this existing contract.

Stefan Orlowsku, managing director of Heineken UK, said: “There continues to be an important role for the great British pub in the UK on-trade, and this acquisition is a significant vote of confidence in the channel.

"Owning the Galaxy freehold will allow us to continue the successful transformation of our pub business, concentrate on operational excellence and deliver long-term value from a high-quality, well invested pub estate."

Return of investor confidence

Peter Hansen of RBS deal adviser Sapient Corporate Finance, added: “This is the largest tenanted transaction since December 2003 when Punch Taverns acquired Pubmaster for £1.2 billion and shows the return of investor confidence in the future of the tenanted trade, particularly larger, high quality, tenanted pubs. The market is showing signs of a return to more normal conditions.”

Sapient has advised on 47 major deals in the sector since March 2003, worth a total of £7.3bn. In April this year, it advised Brockton Capital on the sale of the 14-strong London estate of Realpubs to Greene King for £53m and last year it advised Mitchells & Butlers on the sale of its wet-led estate to the Stonegate Pub Company for £373m.