Greene King has agreed a takeover deal with pub company Spirit valued at £773.6million.

The acquisition Spirit, which owns pub restaurant brands including Chef & Brewer, will create an estate of more than 3,000 managed and leased pubs.

Spirit’s board is recommending that its shareholders back the offer from Greene King despite late interest from Magners owner C&C.

Greene King, which currently has around 1,900 pubs and restaurants as well as brewing operations in Bury St Edmunds and Dunbar, is prepared to hand Spirit shareholders a 28.9% stake in a combined company.

Spirit has an estate of 794 managed pubs, also including those under the food-led Fayre & Square and Flaming Grill brands and the drink-based Taylor Walker and John Barras chains.

It also has 433 pubs in its leased estate, the majority of which are former managed sites with an average annual net income of more than £100,000.

Under the deal, Spirit shareholders will receive 0.1322 new Greene King shares and and 8p in cash for every Spirit share currently held.

The cash element, to be paid by Spirit as dividends, will consist of a 1.5p per share final dividend for 2014 and a special interim dividend of 6.5p per share.

Based on Greene King’s closing share price of 808.5p on November 3, the offer values each Spirit share at 115p, representinig a premium of 52.2% on the value of 75.5p on September 22, the final day before Greene King’s initial approach.

Greene King chief executive Rooney Anand said today the acquisition was a key step towards the company’s objective of building the “best pubs and beer business” in the UK.

He continued: “This exciting combination of the Spirit business with Greene King accelerates our momentum and is in line with our stated strategy of further improving the quality of our pub estate and increasing exposure to the growing eating-out sector.

“This offer represents a fair price for Spirit’s high quality estate that fits well within the Greene King portfolio on both a brand and geographic basis, expanding our presence in the attractive London and South East area.

“The combined business will deliver the best pub portfolio in the UK as we combine high quality pub assets, industry-leading brands and talented hospitality teams. We believe this acquisition will drive attractive long term returns for both sets of shareholders, with the combined business benefitting from significant operational efficiencies and cost savings.”

Walker Boyd, chairman of Spirit, said: “Over the last several years Spirit’s team, under Mike Tye, has delivered a turnaround of the business and put it firmly on the growth path. Since the demerger we have pursued a successful strategy of investing in brands, people, infrastructure and property which, when combined with our strong balance sheet, positions the business well for future growth.

“The combination with Greene King will take this to the next level, creating the UK’s leading pub group with further opportunities for growth and accelerating progress towards our objectives of delivering attractive returns for investors, flawless operational execution for guests and compelling development opportunities for our people.”

The agreed deal trumps a surprise attempt to gatecrash the talks by Irish drinks group C&C, owner of Magners cider and Tennent’s lager, which last month tabled a cash and shares offer for Spirit valued at around £750m.

Although this topped a £725m offer from Greene King – which had prompted the Spirit board to enter into talks with the Suffolk company, having rejected a previous approach – Spirit continued to favour a tie-up with Greene King, viewing it as offering greater synergies.

C&C could yet come back with a higher offer but the £773.6m valuation of the agreed deal could prove decisive.