Pub firms agree £773m takeover deal
Two of the UK's biggest pub companies are set to join forces after they agreed a takeover deal worth £773.6 million.
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.
Spirit's board is recommending that its shareholders back the offer from Greene King despite late interest from Magners owner C&C.
Greene King, which dates back to 1799 and has around 1,900 outlets, is prepared to hand Spirit a 29% stake in a combined company.
Spirit has an estate of 794 managed pubs including those under the brands Fayre & Square, Flaming Grill, Taylor Walker and John Barras.
There are also 433 pubs in its leased estate, the majority of which are former managed sites with an average annual net income of more than £100,000.
Greene King chief executive Rooney Anand said the acquisition was a key step towards building the "best pubs and beer business" in the UK.
The takeover comes as Greene King looks to s hift the balance of its estate towards more profitable outlets it manages rather than tenanted operations. It is particularly keen to benefit from Spirit's position in London and the South East.
There are currently more than 1,000 pubs in Greene King's managed estate, including those under the brands Hungry Horse, Old English Inns and Loch Fyne Seafood & Grill.
It has about 900 sites in its Pub Partners estate, of which about two-thirds are run under brewery-tied tenancy agreements. Meanwhile, t he company's breweries at Bury St Edmunds and Dunbar produce Old Speckled Hen, Abbot Ale and Greene King IPA.
The company employs more than 23,500 people while Spirit, which is headquartered at Burton upon Trent, has 17,000 staff.
The merger is expected to generate £30 million a year of cost savings from areas such as overlapping corporate and support functions, although Greene King said it had not yet developed proposals on headcount reductions.
Greene King approached its rival about a combination in September but its offer of 100p a share or £661 million was rejected by Spirit.
Its latest cash-and-shares offer is worth about 115p a share, including a cash payment of 8p a share.
Spirit also rejected a surprise approach from Dublin-based C&C, which brews Tennent's lager and Gaymers cider and had wanted to give a stronger platform for its brands in key UK locations such as London.
Spirit shareholders will now have to vote on the Greene King proposal, which requires the support of 75% of votes cast.
Mr Anand said: "This offer represents a fair price for Spirit's high-quality estate that fits well within the Greene King portfolio on both a brand and geographic basis, expanding our presence in the London and South East area."