If Greene King thought it could win over Spirit Pub Company for the price of a half of mild and a picked egg, it was sorely mistaken. The Suffolk-based brewer and pub chain has had to increase its takeover bid for Spirit to £723.3m, 9.6% more than the £660m it offered in September. Not exactly a cheap date.
The good news for Greene King is that Spirit, having slapped down the previous bid like so many corny pickup lines, has finally come round. The firm’s board is to recommend shareholders accept the offer, which values Spirit’s shares at 109.5p and which would leave Spirit shareholders with 29% of the expanded Greene King.
If that happens, Greene King will add Spirit’s 1,100 pubs and restaurants to its own 1,900, creating a behemoth in the pub and restaurant world. Greene King’s strategy is not one of relentless expansion these days, however.
Boss Rooney Anand has been attempting to push the chain into the more lucrative food market for years now, having sold 275 of its pubs in May to Hawthorn Leisure. It wants Spirit not for its bars but for its restaurants, which include the Chef & Brewer and Flaming Grill chains.
Of course, it’s not quite time for Greene King to break out the Asti in celebration just yet. The bid will have to be approved by the shareholders, and with the way the prices are going right now, they might have pause for thought.
Accepting the 109.5p offer may seem like a no brainer given that Spirit shares were consistently under 80p over the summer, but every time Greene King makes an offer, the price spirals. Spirit shares rose 7.69% to 98p in trading this morning, while Greene King’s remained flat as a week old Newcastle Brown at 768p.
Greene King has until October 30th to make it official and put in a formal offer.