Enterprise Inns has been given the go-ahead to convert to the tax-efficient Real Estate Investment Trust (Reit).
A statement from Enterprise said HM Revenue & Customs (HMRC) had confirmed that Enterprise "is eligible to convert to Reit status if an internal restructuring of the Eenterprise group is undertaken".
Britain's second biggest tenanted pubco has always said it believed there was scope to convert to a Reit without demerging as it did not operate any managed houses.
The conversion would involve the setting up of a new operating company, which would take an intermediate lease over the freehold pub estate from Unique Pub Properties.
To convert to the lower taxes of Reit status, 75% of revenue must come from rent with most of the profit being distributed to investors.
"Accordingly, in conjunction with its tax, legal and financial advisers, Enterprise is progressing the detailed analysis required to decide whether the Board will recommend to shareholders at an EGM that Enterprise should elect into the Reit regime," said a spokesman.
"We expect this work to take several months to complete and a further announcement will be made in due course."
Punch Taverns welcomed the news from Enterprise.
"Punch notes the statement from Enterprise Inns and welcomes the news from HMRC regarding the eligibility of that business for potential conversion to Reit status which is consistent with Punch's own discussions with HMRC," a statement said.
"As stated previously, Punch continues to consider the opportunity of a potential conversion to Reit status on its merits."
The news saw shares rocket yesterday with Enterprise up 29% to 510p and Punch 11% to 600p.
Marston's also jumped up 17% to 234p and Greene King 10% to 590.5p.