BREWER Scottish & Newcastle significantly expanded its pubs empire yesterday by announcing a deal to manage 364 sites being sold by rival Spirit.

The estate, which includes 250 neighbourhood pubs, is being sold for £345m to an investment company owned by property tycoon Robert Tchenguiz, who will lease them back to S&N.

The deal will see the number of pubs run by the brewing group, which owns the Tyne and Federation breweries in Newcastle and Gateshead, increase to about 1,500.

The deal will also be a major boost to its brewing operation, Scottish Courage, which will supply the pubs' beer.

Spirit, which is left with about 2,000 pubs, decided to sell the pubs after a review of its estate concluded that certain sites would operate better as tenanted businesses.

Mr Tchenguiz, who recently sold major shareholdings in pub chain Pubmaster and Odeon Cinema, set up Globe Pub Company in order to buy the outlets. His portfolio of property across the UK is worth about £4bn.

The pubs are spread across the UK and also include 90 city bars and ten food sites.

The sale comes only a year after S&N sold its chain of 1,400 pubs, restaurants and lodges to Spirit for £2.5bn. Some of those being leased back under yesterday's deal are part of the original estate sold by S&N.

Scottish Courage chairman John Dunsmore said the group had achieved the "significant business win" because of its strength in leased pubs and its portfolio of beers, which include Foster's and Kronenbourg.

S&N said in a recent trading statement that sales of its top four brands were up five per cent in the UK, even though it resisted the temptation to cut prices over the summer.

The deal is unconditional and is expected to be completed on Sunday.