Greene King is likely to have to offer between 110p and 120p per share for Spirit Pub Company, an amount that can be justified from a multiple of earnings perspective, according to leading analyst Nick Batram.

Batram, of Peel Hunt, said Spirit’s shares have reached his “far value” Target Price identified before Greene King’s approach for the group. At the time of writing its share are 96p - Batram has a Target Price of 95p.

“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.”

Spirit’s full-year results announcement is due to 22 October, the 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,” Batram said.

Regarding his expectations for the results, he added: “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.”