The idea received an immediate thumbs-down from Morland's chief executive, Jasper Clutterbuck. He said yesterday: 'I can see no likely benefit to the majority of Morland shareholders from a merger.'
Greene King failed to buy Morland in a fiercely hostile bid battle that climaxed at the end of July last year. Under the rules drawn up by the Takeover Panel Greene King is free to re- bid any time after 25 July. However, after the bruising it received last year, the East Anglian brewer is unlikely to rejoin a hostile fight.
Failure to take out Morland was particularly embarrassing because Greene King started with acceptances from 44 per cent of the equity base - a stake held by the Whitbread Investment Company. WIC sold Greene King 29.9 per cent of Morland and accepted the cash bid of 450p for the other 14 per cent.
Greene King shares rose 3p yesterday to 524p. They were at 500p before the Morland bid. Shares in Morland have risen from 350p before Greene King's bid to 543p yesterday.
Greene King management will be aware of what happened to Boddington, holder of a near 20 per cent stake in the West Country pub operator JA Devenish. The rival publican Greenalls came in to bid for Devenish on very generous terms, leaving Boddington with a handsome profit on its 20 per cent holding.
Greene King may be hoping that, in similar fashion, a third party will bid for Morland. Greene King has already seen a 20 per cent appreciation in the value of its investment in Morland. It spent pounds 28m on the stake, which is now worth pounds 34m.
Greene King yesterday published financial results for the year to 2 May. Pre-tax profits slipped to pounds 20.1m from pounds 20.2m. In contrast Morland profits have risen - interim figures for the six months to 31 March showed a 28 per cent expansion.
Sales of IPA, Greene King's mainstream bitter beer, moved ahead 4 per cent. However, sales of the stronger Abbot Ale fell 8 per cent.
Provisions for bad loans to free house publicans rose from pounds 1.9m to pounds 2.1m. However, Greene King's chairman, Simon Redman, said the company would continue to lend to free houses. Beer sold on credit is supplied at full list price. Discounts have become institutionalised in cash sales.
Earnings per share fell to 35.4p from 36.1p. However, excluding property disposals, there was a small rise. The dividend rose 6 per cent to 12.3p.
Burtonwood Brewery, a Cheshire- based firm, made pounds 3.5m pre-tax for the period to 31 March, down from pounds 4.6m. The fall was due to lower property disposal profits. The dividend was raised to 4.7p from 4.25p. Earnings per share were 12p from 18.6p.
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