Tenanted pub operator Punch Taverns is widely believed to have made an unsolicited approach to buy the privately-owned Spirit Group for an estimated £3b.
Both parties declined to comment on the rumours. However, it is understood that there is no pressure on Spirit to make a speedy decision from its owners, capital venture firms Texas Pacific Group, Blackstone and CVC Capital.
A deal would bring Spirit full-circle, as it was originally the managed pub division of Punch before it demerged in 2002. It would also allow Punch, which currently has around 7,800 pubs to overtake Enterprise Inns as the UK's largest pub operator.
Industry sources believe Punch would convert some 1,200 of Spirit's 2,000-strong estate into tenancies and sell the remaining 800 larger venues to a third party - the favourite being managed pub operator Mitchells & Butlers.
Flotation is another option and Spirit's sale of 364 pubs to Robert Tchenguiz last year was viewed as a tidying-up exercise in advance of a move to public ownership.