Punch Taverns announced details of its proposed £1.2bn takeover of leased and tenanted pub company, Pubmaster on Thursday (6 November).

The deal, involving 3,110 Pubmaster properties, will leave the enlarged Punch with more than 7,400 pubs once approximately 200 have been sold off to satisfy the Office of Fair Trading's rulings on monopolies.

Punch's property and development director, Deborah Kemp, said the Pubmaster estate was one of its targeted acquisitions because with a similar business model it would be easy to integrate into the Punch portfolio.

She added: "The group has had very little investment in the last few years so we believe there is significant room for growth through investing, which is what we're good at."

The group has yet to finalise plans for the pubs' development, however.

The deal, which is still subject to shareholder approval, was funded by Punch's recent refinancing and includes over £1bn in debt. The company has estimated that combining the two will save in excess of £10m in operating costs.

Kemp said Punch will always be looking to grow through acquisitions: "We believe we are very good at buying business and integrating them into our own and I'm sure there will be other opportunities arising and we'll look at them when they do."

Although the deal leaves Punch with the largest pub estate in the UK, the company will be pushed into second place by Enterprise in January 2004 following its scheduled overtaking of the Unique Pub Company, which will take Enterprise over the 8,000 property mark.

The announcement came alongside the release of Punch's preliminary results for the year to 23 August 2003.

Group turnover was up 10 per cent to £429m and operating profit up 12 per cent to £227m with pre-tax profit up 22 per cent to £113m.

Over the year – the first full year of trading since the company was floated in May 2002 – the company has invested £33m in the development of its estate. Excluding the Pubmaster deal, Punch acquired 283 pubs and sold or delicensed 70, leaving it with a total of 4,515 properties at the end of the period.

Chief executive, Giles Thorley (pictured), said: "Since flotation we have taken the opportunity to restructure and improve many areas of our operations and support to retailers. Most recently we have completed the restructure of our debt. These actions have created a very strong platform for future growth." Details: www.punchtaverns.com