C&C Group (LSE: CCR) — the Dublin-based company behind numerous cider brands, including Magners, Bulmers and Ye Olde English — issued a statement today in which it confirmed that it has made a preliminary approach to the Spirit Pub Company (LSE: SPRT), which operates pub & restaurant brands such as Chef & Brewer, Fayre & Square and Flaming Grill from its Burton-upon-Trent headquarters. At the time of writing C&C’s share price is down almost 11%, whilst Spirit’s is up close to 1%.
Whilst cautioning that there’s no certainty about whether a firm offer will be made, C&C says that it believes buying Spirit would enhance long-term shareholder value in a number of ways, including revenue and cost synergies, an improved route-to-market for C&C’s brands, and the ability that a bigger business would have to negotiate better terms for procurement.
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C&C’s statement follows one from Spirit yesterday, in which Spirit said it had received the preliminary approach, but that, after reviewing the proposal, the board had rejected it. Under the City Code on Takeovers and Mergers, C&C now has until 5pm on 20 November to announce whether or not it has a definite intention to make a bid for Spirit.
C&C is not the first suitor for Spirit’s corporate hand. Towards the end of September Greene King (LSE: GNK) confirmed press rumours that it was considering a merger with Spirit, which drove the Burton-based company’s share price up 20% in day.
After rejecting the initial approach from Greene King, Spirit said last Monday that it would be willing to recommend an offer based on a revised proposal it received from Greene King on 18 October, which valued Spirits shares at around 109.5p. Spirit also said that its board was in discussion with Greene King in relation to the other terms of the proposal. Greene King now has until October 30 to make its own firm offer for Spirit.
Spirit’s share price now stands at 107.1p — that’s up almost 50% from this time last year, and an index-trouncing gain of 155% over the past five years, during which time the FTSE All-Share index rose just 27.2%.
In contrast, at €3.50, C&C’s share price has fallen 15.5% over the past 12 months, and has only managed a 27.5% rise over the last five years, barely better than the FTSE All-Share index.
Meanwhile, Greene King is down 7% on this time in 2013, at 784p per share, but has comfortably bested the index over five years with a gain of 87%.