Heineken and Punch founder in takeover fight for British pub giant

Heineken (LSE: 0O26.L - news) has been involved in a secret takeover battle to gain control of Punch Taverns (Other OTC: PCTVF - news) , one of Britain's biggest pub operators.

Shares (Berlin: DI6.BE - news) in Punch spiked by 36% after Sky News revealed that the multibillion-pound Dutch brewer - which is also behind the Strongbow and Foster's brands - has made an approach to the board.

Heineken is facing competition from Alan McIntosh, a wealthy entrepreneur who was one of the company's founders.

Any tie-up between Heineken, which already owns 1,100 leased pubs through its Star Pubs & Bars division, and Punch, which owns about 3,300 sites across the country, would be expected to face close scrutiny from competition regulators.

Punch last month reported its first annual profit since 2013, and said that it had reached the conclusion of a disposal programme aimed at reducing its huge debt pile.

Its improvement in its financial performance under new chief executive Duncan Garrood comes after years of complex restructuring which included a demerger of Spirit, the managed pubs company which was later bought by Greene King (Frankfurt: A0F66P - news) .

Mr McIntosh, who is said to be working with advisers at Bank of America Merrill Lynch, is understood to have pitched an offer at more than 180p-a-share, while Heineken's bid may have been marginally below that level, sources said.

Punch shares were trading on Wednesday morning at about 129.4p, giving it a market value of £285m, although it still has significant debts.

But they climbed to as high as 176.7p as details of the possible takeover were revealed.

Punch confirmed in a statement that it was in "advanced discussions" over a proposal involving Heineken valuing it at 174p per share.

It also said it was in discussions over a separate approach from Emerald Investment Partners over a 185p per share offer.

The Scottish Licensed Trade Association's chief executive, Paul Waterson, said of Heineken's interest: "We have grave concerns about today's announcement and urge the attention of the Competition and Markets Authority.

"It would create a monster-tie; a chain of over 4,400 pubs that would destabilise an already fragile industry.

"A backwards move, it represents bad news for brewers, whose route to market will almost certainly be controlled by Heineken.

"It also signals bad news for drinkers who will be offered far less choice at the bar.

"Moreover there are disturbing implications for tenants who are already compromised by the tied pub system, especially in Scotland where there is an absence of legislative protection."

Neither Heineken nor Mr McIntosh could be reached for comment.