Canaccord highlights importance of Spirit takeover after "lacklustre" update from Greene King

19th Jan 2015 09:53

Greene King's Christmas trading update on Monday was "slightly lacklustre", according to Canaccord Genuity, though the broker maintained its 'buy' rating on the pub and brewery group.Retail like-for-like (LFL) sales over Christmas and the New Year alone were up 2%, but were flat over the six weeks to 11 January as a whole.The company, whose shareholders have voted in favour of the proposed tie-up with Spirit Pub Company, also said it expects the deal to complete by the end of the first half of 2015, pending regulatory approval."Today's slightly lacklustre [third-quarter statement] from Greene King underlines the importance of the Spirit acquisition and the £30m of synergies to be extracted," Canaccord analyst Nigel Parson said."But the deal is more than purely defensive, we believe the combined entity will be a much stronger investment proposition with higher quality earnings, stronger free cash flow and better growth prospects. This goal is where investors need to remain focused."He kept a 880p target price for the stock, recommending investors to "keep the faith, follow the Spirit".The shares were flat at 787p by 11:00.