Tennent's Lager owner C&C Group has seen its share price tumble by more than 10 per cent as investors responded to its takeover approach for Spirit Pub Company.

The company emerged as a rival to Greene King for the pub giant late on Thursday night, days after the Spirit board backed a revised proposal from the Belhaven owner.

Spirit, which runs pubs in Scotland under the John Barras and Chef & Brewer brands, said its board had reviewed the C&C approach and rejected it.

However, C&C remains a serious contender for the business, and insisted that a deal would "transform C&C and enhance long-term shareholder value" in a statement to the market yesterday.

Although it holds a 25 per cent stake in Maclay Inns, and has interests in drinks wholesaling, the acquisition of Spirit would make C&C a pub operator in its own right.

C&C said the 1,200 strong Spirit estate would provide a major platform and route to market for its Tennent's and Magners cider brands in the on-trade in England and Wales, where the competition between brewers is extremely tough.

It highlighted the revenue and cost synergy benefits and improved procurement terms a deal would bring, alongside a broader range of strategic and operating options.

While C&C did not disclose specific details of its bid yesterday, there have been suggestions that it would be worth more than the Greene King proposal.

The latter approach comprises 0.1322 Greene King shares per Spirit share and a cash payment of 8p (including any 2014 dividend), representing an indicative value of 109.5p per Spirit share.

Although reports suggesting the C&C offer would be worth 115p per share are understood to be wide of the market, it is believed the offer from the Irish company would be worth more and with a higher cash element included.

As such, it is confident its offer would offer greater value and certainty to shareholders.

C&C said in a statement: "C&C's management team is experienced in running a vertically integrated pub and long alcohol drinks business and strongly believe that a combination of C&C's brands with Spirit's high quality, well-located pub estate is the most effective way to optimise shareholder returns in a competitive UK market."

Shares in C&C Group closed down 0.4p or 10.2 pere cent, while Spirit shares edged up 1p at 107.25p.

C&C Group, which is led by several senior former Scottish & Newcastle executives, has invested heavily to grow its business in the UK since acquiring TCB from AB-InBev for £180 million in 2009.

It has reinvigorated the Tennent's brand through heavyweight advertising, acquired Wallaces Express in Scotland, and extended its loan book to pub owners.

It has built its brand portfolio by launching brands such as Caledonia Best and Heverlee, and launched a craft brewery with Alloa-based Williams Bros at Drygate in the east end of Glasgow.