S&N has announced that it has agreed to sell its managed pubs, restaurants and lodges business (S&N Retail) for £2,510m, a move that will now see it focus on international brewing.

The deal has been made with Spirit Amber Bidco, a new company formed by a consortium led by Texas Pacific Group and The Blackstone Group and also comprising CVC Capital Partners and Merrill Lynch Global Private Equity. At the same time the pub group Spirit Group Holdings Limited will be incorporated into Spirit Amber Holdings.

The transaction, which is expected to be completed during November 2003, is subject to approval by S&N shareholders.

Tony Froggatt, Chief Executive of S&N said: "The successful sale of S&N Retail is a key step in the Group's strategy of focusing on its brewing business. The proceeds from the sale will be used to reduce debt, strengthening the financial position of Scottish & Newcastle. This will enable us to develop and drive value from our existing European platform, whilst continuing to build on our established positions in other markets where S&N has high potential for organic growth such as Russia, the Ukraine, India and the United States."

Tony Campbell, Chairman of Spirit Amber said: "We are delighted to acquire such a high quality business with great pubs and great people. I am confident that the business will continue to prosper as part of the new group, which will be the leading managed pub business in the UK."

S&N has also signed a seven-year agreement for the supply of its brands of beer and cider, at market prices. The agreement contains a volume commitment which, subject to a market change mechanism, is in line with current volumes supplied to the existing S&N Retail Estate.

S&N said its current trading continues to be in line with market expectations.