Spirit shares lifted on raised bid

Spirit Pub Company is the one of the few major firms to shine on London’s Stock Exchange today after a raised takeover bid.

Spirit says its board is again in talks with rival Greene King, on a revised 109.5p-per-share takeover offer, valuing Spirit at £723.3m.

The renewed cash-and-stock offer of 109.5p per share is a 20% premium to the Spirit stock’s closing price on Friday.

Sprit shares are trading 6.6% higher this afternoon at 97p, whilst Greene King stock is 0.6% lower.

Spirit stock has continued the broad advance commenced after it listed in 2011.

The market is sticking with a narrative that has Spirit as a ready-made take-out candidate after its spin-off from Punch Taverns Plc.

The story has an eye to Spirit’s healthy gearing, albeit with a business mix that was not instantly orientated toward growth.

The stock has risen from 35p in September 2011, soon after its debut, to today’s high of 101.75p, a gain that approaches 200%.

Spirit shares rose 35% since Greene King’s initial offer

Around 35% of the tally since 2011 was notched-up within the last month alone, after Spirit rejected a £661m takeover approach from Greene King on 23rd September.

At the time we doubted Spirit was worth more than 91p per share, although we accepted the merits of the deal meant Greene King might end up having to pay more than that.

On that basis, it very much looks to us that Greene King cannot afford to raise its bidding any further.

If that’s the case and no deal is signed; at least 35% of Spirit’s current share price could be at stake, given that’s how much Spirit gained since Greene King’s initial offer on September 23rd.

The deduction of that value also approximately coincides with 38.2% of the rise since September 2011.

Additionally, that retracement level marks the beginning of Greene King’s acquisition attempt on September 23rd.

Greene King has until 30th October to decide whether to continue with a firm offer to Spirit.

The deadline was set to expire on Tuesday (21^st October) but was extended by ten days to allow the companies to continue discussions.

It’s worth pointing out Spirit reiterated today “There can be no certainty that any firm offer will be made”.