Shares in City Pub Group Plc soared more than 30% after it agreed to a £162 million ($201 million) takeover by larger rival Young & Co’s Brewery Plc as British pubs struggle during the cost-of-living crisis.

Shareholders in the 50-strong upmarket chain will receive 75% of the amount in cash and the rest in Young’s A shares, leaving them with about 6% of the overall company. The deal, which will expand the Young’s estate to 279 premises, is worth 145p per share, a 46% premium to Wednesday’s closing price.

The takeover comes at a tough time for the UK hospitality sector as high inflation has seen consumers rein in spending.

More than two pubs closed every day in England and Wales in the first six months of this year, according to data from real estate company Altus Group, underlining the challenges faced by the industry.

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Initial approaches by Young’s were rejected due to the uncertain economic climate, high interest rates and inflation, City Pubs Executive Chairman Clive Watson said in a statement. However, the board decided the company would be better off in the short term if it sold out, he added.

Watson founded City Pubs in 2011 before it went on to list on the stock market in 2017. It focuses on higher-end pubs in London and the south of England, with some offering bedrooms for overnight stays.

Young’s said it hoped to find synergies between the businesses, both at its pubs and in the head office.

Shares in Young’s were slightly higher in early trading Thursday.

JP Morgan Cazenove Ltd. acted as financial adviser to Young’s, with Stifel joint broker. Houlihan Lokey and Liberum were financial advisers to City Pubs. Panmure Gordon is also joint broker to the target company.

(Updates with premium, share value in second paragraph, advisers in last paragraph)