Punch drunk after two takeover bids

Shares in Punch Taverns have rocketed as the second largest pub group in the UK confirmed it's at the centre of two takeover bids. Valuing the company at around £400 million, rival offers from brewing giant Heineken and Punch's founder saw the share price shoot up nearly 40%. A bidding war could be on the cards.

Patron Capital Advisors has put an initial 174p offer on the table, in a bid that will see Dutch brewer Heineken acquire a stake on completion.

But the bid has already been trumped by a cash offer from Punch founder Alan McIntosh. The property and healthcare investor's private family company Emerald Investment Partners has said it will pay 185p a share.

The takeover attention already values Punch between £386.2 and £410.6 million, a premium of 35-43% to its closing price before the approaches were made public. If the pair are adamant they want the profitable pub group, this price tag will go higher.

Punch's shares soared 37% to 176p Wednesday afternoon and are now worth double their post-referendum low of 85p.

Formed in 1977, Punch is one of the largest pub companies with a UK estate of over 3,300. The group has only just returned to profit for the first time since 2013, swinging from pre-tax loss of £105 million to a profit before tax of £60 million.

The group's also just finished its disposal programme, with the £234 million generated last year helping bring debt down by £223 million, a 16% reduction. Its debt level has fallen by over a fifth since October 2015, but it's still an eye-watering £1.2 billion in the red.

Both Patron and Emerald have until 11 January to either make a firm offer for the pub group or walk away.

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