BREWER Scottish & Newcastle has sold more than 1,400 pubs, restaurants and lodges for £2.51bn.

Pubs group Spirit, based in Staffordshire, formerly known as Punch Retail, has become the UK's largest managed estate operator, with more than 2,500 pubs, as a result of the deal, taking over S&N brands Chef & Brewer, T&J Bernard and Premier Lodge.

S&N decided to sell its pub and restaurant estate to concentrate on its brewing business, which makes the brands Fosters and Kronenbourg.

David Pope, leisure analyst at stockbrokers Brewin Dolphin, said: "S&N already has sizeable interests in Western Europe and will be looking to expand that into eastern Europe, including Russia, the Ukraine and Slovakia. The area is a huge consumer of lager, mainly operated by localised brewers.

"S&N could use some of the money to turn a number of localised brewers into a national operator across eastern Europe.

"The deal leaves Spirit as the UK's largest managed pub owner and gives them an amazing start position. It is also good for S&N because Spirit is tied in to buying beer from the former owner for the next seven years. It is a real win-win situation."

Spirit's current outlets include Wacky Warehouse, Q's, Tom Cobleigh and Two For One. It employs 17,000 people and generated sales of more than £500m in the year to August.

Backers of the bid included the private equity companies Texas Pacific, Blackstone and CVC Capital Partners.

Other competing offers are thought to have included the Laurel Pub Company.

Mr Pope said: "The strength of interest helped S&N to generate far more than the £2bn-plus expected at the start of the auction process in April."

S&N chief executive Tony Froggatt said: "The successful sale of S&N Retail is a key step in the group's strategy of focusing on its brewing business.

"The proceeds from the sale will be used to reduce debt, strengthening the financial position of Scottish & Newcastle."

Despite the deal, Spirit is expected to consider the disposal of some parts of its estate.

Most likely is the Premier Lodge business, which Whitbread and budget hotel chain Travelodge have already expressed an interest in buying.

* The battle for control of Hartlepool's Pubmaster could be decided by Christmas. Punch Taverns is in exclusive negotiations to buy the 3,200-strong pub company. Mr Pope said: "Both companies are looking at consolidation in the pubs market, and I believe a tie-up between the two would be a good deal for both.

"The negotiations will probably last between eight to 12 weeks, with a deal probably concluded around Christmas."