Mitchells & Butlers will convert some of the pubs to its own format

Mitchells & Butlers will convert some of the pubs to its own format

Mitchells & Butlers (M&B)  has acquired the majority of Orchid Group’s pub estate in the UK for GBP266m (US$451m).

The UK's largest managed pub operator said the deal, announced today (16 June), includes 173 predominantly freehold pubs and Orchid's head office.  An M&B spokesperson told just-drinks there will be no staffing changes for the first 15 months, as Orchid's employees will continue to operate leasehold sites retained by the group's owners under a "transitional services" agreement. 

After 15 months, the Orchid head office is likely to be closed. However M&B will work to relocate any affected employees, the spokesperson added.

The move follows confirmation last month that the managed chain was holding talks with Orchid over a potential buy.

Alistair Darby, M&B's CEO,  said: “The acquisition of the majority of the Orchid estate will accelerate Mitchells & Butlers' growth and present significant opportunities for value creation through cost savings, synergies and the conversion of Orchid pubs to Mitchells & Butlers brands.”

The company expects to make GBP6m a year in cost savings from the deal and receive a double digit boost to earnings. It will convert 96 of the pubs to Mitchells & Butlers brands and formats over a two-year period.