Shorecap reviews C&C 'buy' after Spirit rebuffs approach

24th Oct 2014 15:17

Shore Capital is putting its 'buy' advice on C&C under review after the Irish drinks group said it was in talks about a possible counter-bid for Spirit Pub Company.C&C said on Friday that it was considering making an offer for Spirit, which has already indicated it would accept a £723m bid from rival Greene King. Spirit has rejected C&C's approach without saying why.Shorecap said the potential 115p per share offer from C&C was slightly more than Greene King's bid, which amounts to 113.4p per share.But the broker said the potential savings from a tie-up between C&C and Spirit were likely to be limited, while savings from a combination of Spirit and Greene King would be "material".Analyst Phil Carroll said: "The Shore Capital Leisure team estimates c£20-40m reflecting savings in overheads, purchasing and cross-selling Greene King product through the Spirit estate."Under the takeover code, C&C now has until 5pm on 20 November to make a firm bid or walk away. For C&C to be successful we believe it needs to materially increase its offer to make it more attractive than the one from Greene King."Carroll added: "C&C is due to announce its interim results on 29 October so some further insight might be revealed then if not before. In the meantime, as this approach could fundamentally change C&C's business model, we put our 'buy' recommendation under review."Shares in Spirit rose 1p or 0.9% to 107.25p at 15:40 in London. C&C's stock fell €0.47 or 12% to €3.45.