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The owners of the Gardens Tavern, which was advertised for sale earlier this month, have accepted an offer from the University of Otago.
"Assuming that the sale is confirmed, several alternative uses for the building and grounds will be considered before a recommendation is made to the University Council," the statement said.
"No decisions have been taken about this as yet."
The purchase price was not disclosed.
The present proprietor of the hotel, Peter Innes-Jones, last week told the Otago Daily Times he was selling the Castle St pub because it was becoming harder for the hotel to make money, but he hoped someone would buy it and run it as a pub.
The site has a rateable value of $1.025 million.