Pubs group Enterprise Inns has continued its expansion by agreeing a £875m deal to buy 1,860 pubs from rival Laurel.

Enterprise, which owns 3,500 leased and tenanted pubs, said the acquisition fitted with its existing portfolio and "further enhances the size, quality and potential of our estate".

Chairman Hubert Reid added: "As the pub industry continues to consolidate, we believe that this transaction provides Enterprise with a strategic opportunity to confirm its position as the number one operator of high-quality leased and tenanted pubs in the UK."

The Laurel pub group is owned by Deutsche Bank and was created by the £1.63bn purchase last year of Whitbread's entire pub estate.

The buy follows Enterprise's deal last month which saw it, as part of a consortium, buy two pub chains owned by Japanese bank Nomura.

The consortium paid £2.03bn for the Voyage and Unique chains, and Enterprise itself invested £75m for a 16.8 per cent stake in the new company.

Enterprise was originally formed in 1991, and floated in 1995 with 486 outlets. Last year it expanded rapidly, buying 439 pubs from Morgan Grenfell Private Equity, part of Deutsche Bank, and then 431 pubs from Scottish & Newcastle - making it the UK's third largest pub owner.

It is planning to fund the latest acquisition by a combination of new borrowings and by raising £295m through a rights issue at 412p a share.

Of the pubs being bought 469 are in the North and Scotland.