Coles to sell pubs chain to Australian Venture Co

Australian grocery chain Coles Group Ltd on Tuesday announced it will be establishing a joint venture with KKR-owned Australian Venue Co Ltd (AVC) for the day-to-day operations of its gaming and hotel businesses.

In Australia, licensed pubs and hotels are allowed to offer slot machine gaming or “pokies” to customers. The number of slot machines allowed each venue is determinant on the area.

Coles currently owns 87 pubs/hotels under the “Spirit Hotels” brand – which includes around 3,000 poker machines.

Coles said it will receive cash proceeds of around A$200 million (US$141.8 million) upon completion of the transaction, after which AVC will manage the day-to-day operations of Spirit Hotels and receive all economic benefits from the business.

The deal is however subject to consent from a small number of landlords and is expected to complete in the second half of the year.