S&N in talks to sell 700 tied pubs to focus on managed brands

Scottish & Newcastle is in talks to sell more than 700 of its tied pubs as it continues to focus on managed brands.

The news follows intense speculation that the company wants to quit tenancies altogether.

Chief executive Brian Stewart said the outlets were "attracting considerable market interest" after the first 360 were put up for sale.

"Increasingly the focus is on the development and expansion of large branded managed pubs, pub-restaurants and lodge hotels," Stewart said.

Would-be buyers are likely to include national tenanted operators as well as newcomers such as New Century Inns.

Property investors are also interested after Royal Bank of Scotland bought a batch of S&N pubs but handed back management to S&N free of the tie.

S&N has to reduce its estate to 2,739 to comply with the Beer Orders after its £1.1billion acquisition of Greenalls' pubs.

S&N has begun integrating the Greenalls pubs into its managed estate, axing all the major retail brands except Squares.

This will lead to 70 Red Rose Inns becoming Chef & Brewers, Quincy's becoming Old Orleans and 90 more pubs becoming community concepts such as John Barras & Co.

When it is completed, nearly two-thirds of S&N's pubs will be branded. Just two of the seven directors on the Greenalls Pubs & Restaurants board are joining S&N.

Those leaving include managing director Mark McQuater, who joined less than a year ago from Tom Cobleigh.

S&N invested £123million in its pubs in the six months to October 31, channelled into the branded estate.

This helped it to push up pre-tax profits by 7.3 per cent to £222million, including a 3.5 per cent increase in operating profits for its managed houses.

It has reduced the number of tenancies by 30 per cent over the past year. Although it says it is committed to running tenanted pubs, these are more likely to be freed of the tie.