Punch Taverns has exchanged contracts to buy rival group Pubmaster.
The £1.2 billion purchase will add 3,110 leased and tenanted pubs, in a deal that will double the size of the Punch estate and make it one of the UK's largest pub operators.
The deal, which is subject to shareholder approval, should be rubber-stamped by November 28. Combining the two groups should save the company about £10 million a year.
The combined group will have more than 7,400 pubs, although it is understood that the company will dispose of about 200 pubs from the acquired estate in order to comply with competition rules.
Punch has today reported a 22 per cent hike in pre-tax profits to £113m for the year to 31 August 2003, delivered through a combination of organic growth and acquisitions.
Group turnover was up by 10 per cent to £429m, from £202m in 2002.