Spirit Pub Company has rejected an attempt by the company behind Magners cider to gatecrash its £750m takeover by brewer Greene King.
Irish cider company C&C Group is understood to have made a new £760m approach for the chain of 1,200 pubs in an effort to trump Greene King’s offer – which the Spirit board has indicated it is willing to recommend to shareholders.
In a statement after the stock exchange had closed last night, Spirit said: “The board of Spirit confirms that it has received a preliminary approach from C&C Group plc regarding a possible offer for Spirit. The board of Spirit has reviewed the proposal and rejected it.”
C&C’s shock move is thought to have been pitched at around 115p a share, with around a third of it cash and the remainder being offered in C&C shares. Greene King’s approach includes just 8p of cash, although it was worth 113.4p a share at last night’s stock market close. Greene King also owns 1,900 pubs and restaurants and so can offer potential synergies with Spirit’s estate which includes Chef & Brewer, while C&C is solely a drinks group.
Greene King, which owns pubs and restaurants including the Loch Fyne and Hungry Horse chains as well as ales such as Old Speckled Hen, has already increased the price of its potential bid – having improved the amount it is prepared to pay on Monday, a day ahead of a takeover deadline that would have forced it to either make a formal offer or retreat.
Shares in Spirit rose to 101.75p on that news, and they were struggling to get much higher than 104p on Thursday until rumours of a new suitor emerged half an hour before the stockmarket closed. The shares, which initially spiked to around 110p, closed at 106.25p – although at the time there was no clear information that C&C had been rebuffed.
The C&C move will come as a surprise to the industry, which had viewed the likes of pub groups Marston’s and Mitchells & Butlers as the more likely candidates to attempt to compete with Greene King. It has also surprised City watchers, as shares in Spirit, which was split from Punch Taverns in 2011 and also owns Flaming Grill restaurants and Good Night inns, were trading at around 75p before it became a target. That share price already represented a significant improvement, as they began 2012 at just over 40p.
On Wednesday, Spirit said its full-year pretax profit had grown by 11%, buoyed by strong growth in its core managed pubs division – run by landlords who work for the pub group.
Greene King’s business dates back to the 18th century when Benjamin Greene established a brewing business in Bury St Edmunds in 1799. C&C can trace its roots back 79 years when it was founded by William Magner. It acquired the rights to Bulmers cider in Ireland in 1937 and has made numerous acquisitions since, including Scottish drinks wholesalers, Wallaces Express, and Ireland’s leading drinks wholesaler and producers of Tipperary Water, Gleeson Group, during the past two years.
A takeover by Greene King would leave Spirit shareholders with 29% of the combined company, although there is no certainty that a formal offer will be made.
Greene King and C&C did not comment.
