Greene King eyes combination deal

Greene King IPA ale Photo credit should read: Yui Mok/PA Wire

Greene King IPA ale Photo credit should read: Yui Mok/PA Wire - Credit: PA

Greene King, whose brands include Hungry Horse, today confirmed it is working on a deal to join forces with Chef & Brewer firm Spirit Pub Company.

The Suffolk-based brewer's disclosure came after the Financial Times reported that the company had made an offer of around 110p a share for Spirit, valuing the rival chain in the region of £725 million.

The company said: 'In light of recent speculation, the board of Greene King confirms that it has approached the board of Spirit in relation to a potential combination of the two companies.' It did not provide further details.

Greene King, which dates back to 1799, has around 1,900 outlets with the majority being in its managed pub estate. Other brands include Loch Fyne Restaurants, while its beers feature Old Speckled Hen and Abbot Ale.

Spirit has more than 1,200 pubs across the country following its demerger from Punch Taverns in 2011. The managed estate comprises more than 750 sites, with brands such as Fayre & Square and Flaming Grill.

The company recently raised the City's profit forecasts after a better-than-expected summer performance, even though conditions remain challenging.

Greene King has made a number of acquisitions and disposals throughout the year as it continues to shift the balance of its estate towards more profitable outlets it manages rather than tenanted operations.

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The report by the FT said Greene King initially offered 100p a share before raising this to 110p a share. Spirit shares were 13% higher at 88p today.