A struggling Midland pub giant is to offload almost 3,000 sites to help tackle debts of more than £3 billion, it was announced today.

Staffordshire-based Punch Taverns, which has 603 leased pubs and 70 managed pubs in the West Midlands, will cut the size of its business run by tenants by almost half from 5,967 to 3,000 through sales and closures.

Punch, which owns the Chef & Brewer chain, racked up debts making large acquisitions during the credit boom, including the £2.7bn acquisition of rival Spirit Group in 2005.

Now it plans to split the better-performing pub management business Spirit from the struggling tenanted arm to create two independent public companies. Tenanted pubs are run by landlords who pay rent and rely on Punch for beer supplies.

Managed pubs, which have fared better during the recession, are run directly by the company and have more freedom on pricing.

The de-merger is expected to be completed by the end of the summer. Sales and closures will follow over five years. Chief executive Ian Dyson today said splitting the 800-strong Spirit business from Punch’s leasehold pubs would allow the two operations to focus on their own needs.

“He added: “We do not believe that either opportunity can be maximised within the current group structure and accordingly, we propose that the two businesses be separated. Punch will be positioned to drive long-term value by downsizing to a core estate of around 3,000 pubs with the aim of becoming the UK’s highest quality and most trusted leased operator.”

The Harrows Pub in Coven, near Wolverhampton, was boarded up today after being closed at the weekend. Mount Pleasant in Wombourne and the Seven Stars in Seisdon both closed in January.