Punch Taverns, Britain’s biggest pub company, is close to agreeing the sale of about 870 tenanted pubs to Admiral Taverns, a privately owned rival, for an estimated £330 million.

The deal, which could be announced this week, is designed to allow Punch to accelerate the “churn” of the bottom end of its estate of about 9,300 pubs.

Analysts said that Punch, which tomorrow will replace Gallaher in the FTSE 100, had been slower than many rivals in selling its lower-quality pubs, many of which were drink-led establishments that would be less able to counter the impact of the impending smoking ban.

“The likes of Enterprise Inns, Greene King and Marston’s have all been churning more aggressively than Punch,” one analyst said. “It was high time it focused on its bottom end.”

Last year, Enterprise, its closest rival, sold 769 pubs to Admiral for £318 million and its Scottish estate of 137 pubs to Robert Tchenguiz for £115 million. Marston’s is understood to be in final talks over the sale of about 300 tenancies for an estimated £100 million.

The deal will make Admiral Britain’s third-biggest pub operator, behind Enterprise and Punch, leapfrogging Marston’s and Greene King. It already has 1,800 pubs and will have spent more than £1 billion since it was founded four years ago.

One observer said: “For every ten pubs it buys, at least one or two will probably end up as flats or offices. Admiral is good at leveraging the property potential of even the most unloved pubs.”

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