Spirit Pub Company, the group which owns Chef & Brewer, has agreed to a £774 million takeover offer from Belhaven owners Greene King.
The combination will form a group of 3,000 pubs, with the buyer bringing a network of 1,900 pubs and restaurants, including the Hungry Horse and Loch Fyne chains.
The new offer, a mixture of cash and shares, values Spirit at 115p per share, up from an original offer of 100p that was rejected in September.
Spirit received other expressions of interest, including from C&C, the owner of Magners cider and Tennent’s.
Greene King’s move is part of its shift into restaurants and pubs that serve food.
The group has been reorganising its pubs estate.
In May, it sold 275 tenanted and leased pubs to Hawthorn Leisure.
In July, Greene King announced preliminary annual profits of £105m, down 5% on the previous year.
Restaurants saw a 4.1% rise in profit, while profit growth at pubs was up just 2.2%.
Greene King is focussing on the more profitable outlets it manages rather than tenanted operations.
It is particularly keen to benefit from Spirit’s position in London and south-east England.
Spirit shareholders will now have to vote on the Greene King proposal, which requires the support of 75% of votes cast.
Greene King chief executive Rooney Anand said: “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.