Greene King raises glass to Spirit merger deal

Greene King's swoop for Spirit creates a giant with 40,000 staff

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The Independent Online

Greene King and Spirit have agreed a £723 million takeover to create a pub company with the highest sales in Britain.

Together the two will own just over 3000 pubs nationwide, which places them behind rivals Enterprise with 5500 and Punch with 4000.

But with combined sales of more than £2 billion a year the enlarged Greene King will far outstrip Enterprise’s  £640 million and Punch’s £460 million of sales.

Greene King, which runs Old English Inns, Hungry Horse and Loch Fyne outlets, has improved its initial offer for the smaller Spirit, which has Taylor Walker, Chef & Brewer and Flaming Grill in its portfolio, from £660 million to £723 million and so won the expected recommendation of the latter’s board. The final bid will come after full examination of Spirit’s books.

The near all-share offer is worth 109.5p per Spirit share and will see its shareholders end up with 29 per cent of the combined company.


That is a 45 per cent premium to the 75p at which Spirit shares were trading before Greene King’s approach was made public last month and more than twice the 51p at which its shares started trading when it demerged from Punch just over three years ago.

Punch has actually acquired and disposed of Spirit twice, last time paying £2.7 billion for it in 2006. Including debt today’s takeover is worth £1.5 billion.

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The deal, the largest in the pubs sector for several years, will see Greene King chief executive Rooney Anand rapidly step up his drive to move the business into the higher end of good food-serving pubs.

Both businesses have also concentrated on the more profitable managed pubs and cut back their tenanted and leased estates. That is why together they have higher revenues and profits than their rivals, who own more pubs.

Analysts forecast savings from the deal of some £35 million a year. Mike Tye, who has run Spirit since its demerger from Punch, stands to make  more than £5 million in shares, options and pay-off if he leaves following the takeover.

Spirit shares rose 7p to 98p with analysts saying there was little likelihood of a rival bid from other pubcos. Greene King is expected to put more of its beers including IPA and Abbot through Spirit pubs.

No name for the combined company has been agreed although Greene King, which was founded in 1799 in Suffolk, looks the most likely.

The enlarged company will own 450 pubs within the M25. Fuller’s has almost 400 and Young’s just over 200.