The swoop for Greene King by Li Ka-shing, Hong Kong's wealthiest man, may herald the start of many such takeovers for UK assets as the country prepares to leave the EU.

As a purely UK company, heavily geared towards spending by British consumers, Greene King has seen its shares hammered since the vote to leave the EU in June 2016.

Prior to the Leave vote, Greene King's shares were trading at 850p each.

By last Friday, the last full trading day before the takeover by CK Asset Holdings was announced, they had slithered to as low as 563p - reflecting the market's dim view of the prospects for UK consumer spending post-Brexit.

The takeover price agreed by Greene King's board, ironically enough, is 850p.


Li Ka-shing, CKA founder, former chairman and now senior adviser since retirement in May last year, whose other UK assets include the Superdrug retail chain and the mobile telephone operator 3, is a fan of UK assets and he loves a bargain.

He may well have regarded Greene King's bombed-out stock price as an opportunity to buy a quality business at a knock-down price.

That sense of opportunity will also have been heightened by the collapse in the pound.

Before the referendum, £1 bought 11.5 Hong Kong dollars, but today it buys just 9.5 - a devaluation of 17%.

Buying Greene King with Hong Kong dollars will not have been this cheap for many years.

Mr Li will also have identified another opportunity.

Image: Greene King is the UK's largest brewing and pub company

Greene King's shares have not only been under a cloud because of Brexit but also because of the debt that it took on when, in 2015, it paid £744m to buy the Spirit pub chain.

That significantly increased the size of its pub estate which, unlike a lot of pub operators, is largely owned by Greene King itself.

Some four-fifths of its property assets are freehold and, according to the latest valuation, those properties are worth significantly more than Greene King's stock market valuation implied.

That will have made the business even more attractive to Mr Li.

The fact that Greene King's new chief executive Nick Mackenzie, who joined the company in May from the attractions operator Merlin Entertainments, is relatively new to the job will also have made this a good time for Mr Li to make his move.

What is slightly surprising is that Greene King's stock price has continued to trade at a bombed-out valuation despite some other big deals recently in the pubs and brewing sector.

In January, Greene King's smaller rival Fuller, Smith & Turner sold its brewing arm, famous for its London Pride ale, to Asahi of Japan for £250m - a sum that was regarded as a spectacular price.

Then, in July, Ei Group, the UK's biggest pub operator, agreed to a takeover by private equity-backed Stonegate that valued it at nearly £3bn once its debt was included.

Those two deals ought to have flagged to investors that there was hidden value in the sector.

Expect a rally in shares of other pub operators, including Marstons, Mitchells & Butlers and JD Wetherspoon, in coming days.

The bigger picture is that many UK companies are trading at comparatively cheap valuations because the Brexit vote has deterred investors - and the crash in the pound has amplified to potential foreign buyers just how cheap those assets are.