Spirit Pub Company has announced that it is willing to recommend a revised takeover offer from Greene King of approximately 109.5p, which values the company at c£723.5m.
The renewed cash-and-stock offer represents a 20% premium to the stock’s closing price of on Friday (91p). Spirit received the revised proposal from Greene King over the weekend (18 October).
The revised proposal comprises 0.1322 Greene King shares per Spirit share and a cash payment of 8p (including any 2014 final dividend).
Under the revised proposal, Spirit shareholders would own approximately 29% of combined new Greene King.
The revised proposal remains conditional on, amongst other things, confirmatory due diligence and the recommendation of the Board of Spirit.
The Board of Spirit has indicated to Greene King that it would be willing to recommend an offer at the level of the Revised Proposal to Spirit shareholders subject to the satisfactory resolution of the other terms of the offer. Accordingly, the board is in discussions with Greene King in relation to these terms.
Spirit has agreed to an extension of the relevant deadline under Rule 2.6(c) of the Takeover Code until 5.00pm on 30 October 2014 to enable the parties to conclude their ongoing discussions. This deadline may be extended further with the consent of the Takeover Panel, at Spirit’s request, in accordance with Rule 2.6(c) of the Takeover Code.
It said that there can be no certainty that any firm offer will be made.
Spirit will announce its preliminary results for the year ended 23 August 2014 on Wednesday (22 October).
A combined Greene King/Spirit business would create a true pub behemoth, leapfrogging Mitchells & Butlers as the country’s biggest managed operator with c1,900 sites. That’s roughly twice as many as JD Wetherspoon and with an unrivalled brand portfolio encompassing value dining (Hungry Horse and Fayre & Square), community locals (Greene King’s Locals pubs and John Barras), country dining (Farmhouse Inns, Chef & Brewer) and more premium London-centric sites (RealPubs and Taylor Walker). That’s not to mention the Belhaven estate in Scotland, plus Flaming Grill, Wacky Warehouse and Loch Fyne restaurants.
On the tenanted and leased side, adding Spirit’s c450 units to Greene King’s existing 880 or-so would place the new entity’s tenanted arm above both Star Pubs & Bars (1,100) and Admiral Taverns (1,000) in absolute numbers. It would also be a fantastic route to market for Greene King’s beer brands.
Overall the business would have a combined turnover well in excess of £2bn.
