(Reuters) - British pub chain Spirit Pub Company Plc SPRTC.L said its board was in talks with ale maker Greene King Plc (GNK.L) on a revised 109.5 pence-per-share takeover offer, valuing Spirit Pub at 723.3 million pounds.
The renewed cash-and-stock offer of 109.5 pence per share represents a 20 percent premium to the stock's closing price of on Friday.
Shares in Spirit Pub rose 12 percent to 101.75 pence while Greene King rose 0.6 percent to 772.5 pence in early trade on Monday on the London Stock Exchange.
"There is clearly a high chance now for the deal proceeding," analyst Jeffrey Harwood of Oriel Securities told Reuters.
Under the revised proposal, Spirit Pub shareholders would own about 29 percent of combined new Greene King, the company said in a statement on Monday.
"The price is within the range which we expected of 109.5 pence. So ... it's a good transaction for Spirit shareholders. There would also be significant savings Greene King can achieve by putting the two businesses together. So we see it as a favourable transaction for Greene King too," Harwood said.
Spirit Pub last month rejected a 661 million pounds takeover approach from Greene King, which runs breweries as well as pubs, saying the offer undervalued the company.
Spirit, which was spun off from Punch Taverns Plc (PUB.L) in 2011 and runs chains such as Chef & Brewer, Fayre & Square and Flaming Grill, is split into 450 leased pubs and more than 750 managed pubs, with the latter accounting for nearly 90 percent of the group's revenue.
Reporting by Aastha Agnihotri in Bangalore; Editing by Gopakumar Warrier