Pubmaster hopes to complete its £500m purchase of Inn Partnership, the 1,250-pub chain owned by Nomura, by the end of this month.

Pubmaster, which already owns 2,000 tenanted pubs, submitted its bid in mid-December and is in exclusive talks with the Japanese bank.

It is now conducting due diligence across the pub estate, set to take a further two to three weeks, as a team including Robin Saunders of Pubmaster's main investor, the German bank WestLB, looks at Inn Partnership's pubs and its beer supply agreements before finalising the deal.

The Hartlepool-based company said last week: "Pubmaster is committed to creating a large tenanted pub estate, and this will not be the last deal for the group."

If the deal is successful, Pubmaster will become Britain's fourth largest pub group with 3,250 outlets.

Pubmaster's chief executive, John Sands, has been looking to expand the pub chain since its £485m bid for the brewing and pubs group Wolverhampton and Dudley Breweries failed in August last year.

Nomura, which currently owns nearly 5,500 UK pubs, decided to sell Inn Partnership, the ex-Greenalls estate it took over in January 1999 for £375ms, after the investment bank Schroder Salomon Smith Barney approached it in November about arranging a sale.

The Japanese bank is going through a strategic review of its pubs as Guy Hands, the head of its private equity arm, Principal Finance Group, prepares set up his own fund, Terra Firma Capital Partners.

Selling Inn Partnership would leave Nomura with the Unique estate of 3,000 leased pubs, Voyager, which has just under 1,000 ex-Bass pubs bought early in 2001, and Wizard Inns, the 47-pub unbranded managed house chain.