Punch Taverns targets 'quality not quantity' in split

Punch Taverns unveiled the details of its demerger today, a deal that will see the managed estate Spirit spun off from the troubled tenanted pubs arm.

Investors were today sent details of the scheme, which they will vote to approve, or not, at a general meeting on July 26.

Most of the company's massive debts, £2.3 billion worth, will be held within the Punch arm, which has 5080 pubs, more than 2000 of which will be sold over time.

Spirit, to be run by former Marks & Spencer's man Ian Dyson, has around 1350 pubs.

Roger Whiteside will be chief executive of the Punch business, a company built in the credit boom on the back of extensive borrowings. It leases pubs to freelance landlords, who in turn buy beer from the company.

This "tied" arrangement has come under fierce attack of late, not least from the landlords themselves.

Dyson said of the demerger: "This will create the foundation for both Spirit and Punch to execute their plans to deliver long-term sustainable value for all of our stakeholders and builds on the significant progress that both businesses have made over the last year.

"What we are doing is shifting the emphasis from quantity to quality."

The two will have a cash pile of £235 million, which analysts at Panmure called "slightly disappointing".