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C&C shares up as Greene King agrees terms on proposed €989m Spirit deal

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File photo dated 07/03/2011 of a pint of Greene King IPA ale being poured, as two of the UK's biggest pub companies are set to join forces after they agreed a takeover deal worth £773.6 million. PRESS ASSOCIATION Photo. Issue date: Tuesday November 4, 2014. The acquisition of Chef & Brewer owner Spirit Pub Company by Greene King will create a firm with more than 3,000 managed and leased pubs. See PA story CITY Spirit. Photo credit should read: Yui Mok/PA Wire

File photo dated 07/03/2011 of a pint of Greene King IPA ale being poured, as two of the UK's biggest pub companies are set to join forces after they agreed a takeover deal worth £773.6 million. PRESS ASSOCIATION Photo. Issue date: Tuesday November 4, 2014. The acquisition of Chef & Brewer owner Spirit Pub Company by Greene King will create a firm with more than 3,000 managed and leased pubs. See PA story CITY Spirit. Photo credit should read: Yui Mok/PA Wire

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File photo dated 07/03/2011 of a pint of Greene King IPA ale being poured, as two of the UK's biggest pub companies are set to join forces after they agreed a takeover deal worth £773.6 million. PRESS ASSOCIATION Photo. Issue date: Tuesday November 4, 2014. The acquisition of Chef & Brewer owner Spirit Pub Company by Greene King will create a firm with more than 3,000 managed and leased pubs. See PA story CITY Spirit. Photo credit should read: Yui Mok/PA Wire

The sought-after Spirit pub group has reached agreement with pub retailer and brewer Greene King on the terms of Greene King's proposed £773m (€989m) takeover of Spirit.

Spirit had received a preliminary approach from Bulmers maker C&C but rejected it.

C&C still has the option of making another approach before November 20. Yesterday a company spokesman refused to comment on whether it would do so.

C&C shares rose sharply yesterday, indicating that shareholders are pleased that Greene King, rather than C&C, will be buying Spirit.

"There was an initial burst of strength in the stock … I think really there would have been a relief rally built in, and shareholders clearly have a lot of concern about C&C going for the Spirit deal," Merrion Capital's head of research, David Holohan, told the Irish Independent.

"The fact that Greene's bid was accepted by Spirit would have reduced that risk in the market that C&C would still go after the asset. However, there still is the possibility that they will, and that's perhaps why the share price has drifted a bit lower."

"The news flow that C&C had been initially considering a bid for Spirit probably came out sooner than the company would have liked, and as a result of that, they probably haven't been able to get to shareholders and make the case for the acquisition," he added.

"We sould see a lot risks to an acquisition of that size given it's such a departure from their existing business … given the share price reaction this morning, I would have to think that shareholders would react more favourably to C&C simply announcing that they're walking away from the process."

The Greene King takeover of Spirit is subject to the approval of shareholders of both companies.

Greene King chief executive Rooney Anand said the combination is "in line with our stated strategy of further improving the quality of our pub estate and increasing exposure to the growing eating-out sector".

Greene King estimates the new company would have annual revenue over £2.1bn and annual earnings before interest, taxation, depreciation and amortisation (EBITDA) of around £490m. Its portfolio would encompass more than 3,100 pubs, restaurants and hotels in the UK.

Spirit shareholders would own 28.9pc of the new company and Greene King shareholders would own 71.1pc. Spirit chairman Walker Boyd said the merger would "create the UK's leading pub group with further opportunities for growth".

Irish Independent