Stocks in Focus: Greene King

This week Harry Tyler of NW Brown Wealth Management looks at Greene King. 

Greene King, the UK pub and brewing company, recently announced a cash take-over offer from Hong Kong based CK Asset Holdings (CKA). Management of Greene King have stated they will unanimously recommend the terms of the offer to shareholders although shareholders will get the final say.

The deal comes at a time when some investors believe UK assets are undervalued due to Brexit uncertainty weighing on current trading outlooks. However there have been a couple of deals in pub companies recently with Fuller’s selling their drinks business to Asahi, the largest Japanese brewer, and Stonegate Pub Company buying its rival Ei Group.

Greene King owns the property freehold on a large portion of its pubs, which is likely to be the main attraction for CKA. CKA is a global conglomerate with its main focus being property although it does have some investments in ‘Infrastructure and Utility Asset Operations’ and Aircraft Leasing. CKA is exposed across a wide range of property activities from developing real estate, managing the assets and investing in Real Estate Investment Trusts predominantly in Hong Kong.

CKA, controlled by one of Hong Kong’s richest men Li Ka-shing, does not have any plans to make ‘material changes’ to Greene King. Nick Mackenzie, Greene King’s CEO, has stated that CKA ‘shared many of Greene King’s business philosophies’ and current management is expected to stay on and work with CKA to continue the long term growth of the company.

Investors will be hopeful that the demonstrated increase in acquisition activity will help buoy sentiment to the UK market. UK business confidence remains subdued, however with Sterling exchange rates nearing 10 year lows to other major currencies foreign investment seems likely to continue.



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