Young’s has agreed a £162 million deal to snap up London-based rival City Pub Group.

Investors in City Pub Group will receive 108.75p per share as well as the remainder in Young’s shares as part of the deal.

The move will bring a further 50 pubs into the Young’s business, taking its total estate to 279 pubs and bolstering its position as one of the biggest operators in London and the South East.

It comes against a challenging backdrop for pubs and the wider hospitality sector, amid pressure from higher borrowing costs and tighter customer budgets.

Young’s has said it will seek to benefit from “synergies” as part of the deal, particularly linked to overlapping jobs across the two firms.

The companies said the move is therefore “expected to result in a headcount reduction”, including roles within City Pub Group’s management, as well as other corporate and support roles.

Young’s chief executive Simon Dodds said: “City Pubs is an excellent business we have followed for some time, and one which aligns closely with Young’s in terms of both strategy and culture.

“Both businesses have performed well in a tough trading environment recently, testament to the strength of our business models, people and approach to customers.”

City Pub Group was founded by David Bruce, John Roberts and current executive chairman Clive Watson, who has previously appeared in reality TV show Made In Chelsea alongside his daughters, Lucy and Tiffany.

Mr Watson said: “Mindful of the uncertain economic climate, high interest rates and inflation in particular, and our plans for long-term growth as an independent company, initial approaches were rejected.

“However, following careful consideration, we believe the transaction is in the best interests of City Pubs shareholders with the ability to realise 75% of the equity in cash at a material premium to the current share price together with a stake in the future upside.

“The board believes the transaction significantly accelerates the value that could be realised in the short term by City Pubs if it were to remain independent.”

The deal also came as Young’s recorded stronger sales and profits for the past six months.

It posted a pre-tax profit of £24.5 million for the six months to October 2, up from £23.9 million a year earlier.

Meanwhile, revenues rose by 5.4% to £196.5 million for the half-year as it was buoyed by strong drink sales.

Bosses said it saw a particular boost from the recent Rugby World Cup and highlighted surging sales of Guinness and Aperol Spritz.