Under the heading “Greene with envy” Nick Batram at Peel Hunt looks at the upcoming full-year update from Spirit, which is due next Wednesday and states that in order to persuade the company’s investors to agree to a takeover, Greene King is likely to have to offer 110p-120p with a cash component.
Batram said: “Final results are due to be released a day after Greene King’s ‘put up or shut up’ deadline. The tone of the results statement and narrative will undoubtedly be flavoured by what transpires on the bid front.
“In terms of the underlying business, Spirit produced one of the sector’s better recent trading statements both in Managed and Leased.
“There was also encouraging signs that the acquisition programme is gaining momentum post the financial restructuring. Current trading should also be positive given the dry September.
“The shares have now reached our fair value (pre bid) target price and the risk/reward is now more evenly balanced. In order to persuade investors Greene King is likely to have to offer 110p-120p with a cash component – from a multiple perspective we believe this can be justified.”
