Canaccord Genuity sees win-win situation for Greene King and Spirit

20th Oct 2014 13:14

Pub groups Spirit and Greene King can both be winners from their proposed £723m merger, Canaccord Genuity said.Spirit said on Monday that it had received a fresh takeover offer from Greene King at about 109.5p per share. Spirit told Greene King it would be ready to recommend the offer to its shareholders subject to approval of other terms and is in talks.Canaccord said that both sides could benefit from the potential £35m of savings to be made from the deal, which is virtually all-share.The broker said the deal was likely to boost Spirit's earnings by about 15% and about 12% for Greene King.It highlighted other potential benefits such as the chance for Greene King, which brews Old Speckled Hen and Greene King IPA, to sell its beers in Spirit pubs.Canaccord analyst Nigel Parson said: "But it is not just about defensive cost savings: we believe the new group, which we have christened Spirit King, would be a much stronger investment proposition, with higher quality earnings, stronger free cash flow and better growth prospects than Greene King and Spirit currently offer as separate entities."Shares in Spirit gained 6p or 6.6% to 97p at 13:16 in London while Greene King backtracked 5p or 0.65% to 763p.