As we bid farewell to the dying embers of summer, it’s time to welcome a fresh season — yes, autumn, but we in the investment world have been seeing fresh shoots of an acquisition season of late. Today continued this trend, with Greene King (LSE: GNK) announcing that it has reached agreement to acquire Spirit Pub Company (LSE: SPRT).
The deal will see Spirit shareholders receive 0.1322 new Greene King shares and 8p in cash, payable by Spirit as dividends, per ordinary share. That dividend will comprise the proposed 2014 final dividend of 1.5p per spirit Share payable on 10 February 2015 to Spirit shareholders on the register on 16 January 2015, as well as a special interim dividend of 6.5p.
The accepted offer values Spirit at £773.6m, or 115p per share, which represents a 52.2% premium on the closing price of 75.5% on 22 September. The total offer also implies an enterprise value multiple of approximately 10.2 times Spirit’s EBITDA for the 52 weeks ended 16 August 2014.
Greene King believes that the combined group can be expected to achieve cost savings of at least £30m per year, far outweighing the short-term one-off cost of £25m that is expected to be required to deliver these savings.
Both companies now await the approval of the Competition and Markets authority, as well as both sets of shareholders.
