British brewing company Greene King has been given an extension — until close of business on Tuesday — to formally show its hand in the takeover battle for UK bar group, Spirit Pub Company.
Irish drinks group C&C is also interested in the business, which spun out of Punch Taverns three years ago and owns the popular Chef & Brewer chain of pub/family restaurants.
In a statement, Spirit said yesterday that it remains in discussions with Greene King and had extended the deadline for the company to announce its intention or make a formal offer or walk away from the process from yesterday until 5pm on November 4. The new deadline could be further extended if Spirit sees fit.
“The board of Spirit remains in discussions with Greene King regarding the terms of the possible offer. The board remains willing to recommend an offer at the value of the revised proposal… but this remains subject to the satisfactory resolution of the other terms of the possible offer,” the group said.
Earlier this month, Greene King proposed a revised potential offer of 109.5p per share/£723m (€917m) for Spirit, without actually making a formal offer. But the brewer — which also owns a range of pubs — is seen as the odds-on favourite to land Spirit Group, given that a rival proposed offer from C&C has already been rejected by Spirit.
Although it has said there is no certainty that it will table a formal bid, C&C has until November 20 to make an offer for the group or walk away from the process.
C&C’s management would not be drawn on its next move regarding Spirit when questioned at the publication of its first-half financial results earlier this week. A spokesperson for the group also declined to comment on plans when asked yesterday.
However, C&C has said it would view a successful takeover of a group like Spirit as being transformative for its business, in that it would enhance its route-to-market in the UK and revive its presence in England and Wales, in particular, where it has been underperforming of late.
Revenue and cost synergy benefits and a broader range of strategic and operating options would “enhance long-term shareholder value” it said earlier this month when confirming its since-rebuffed initial proposal to Spirit.
C&C’s first-half figures showed a rise in group net revenues for the six months to the end of August, but a near-3% year-on-year drop in operating profit. That was partially down to underperformance in England and Wales. The group’s operations in Ireland and Scotland — driven by its twin cider brands of Bulmers and Magners, along with Tennent’s lager — are underpinning overall group stability and now account for nearly 90% of its operating profits.
C&C’s future in England and Wales — where revenues fell 12.4%, year-on-year, in the first half and operating profits were down by nearly 40% — is unclear. While management believes a successful bid for the Spirit group would go a long way to repairing its fortunes there, other options are also being considered.
These include other potential pub chain acquisitions and/or distribution partnerships with other brand owners. C&C also hasn’t ruled out downsizing its operations in England and Wales and repositioning itself as a smaller premium/export-orientated player in those two markets.
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